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Fiscal and accounting aspects of renting out furnished accommodation


A COMMERCIAL ACTIVITY

Renting out furnished accommodation is treated as a commercial activity, so you are fiscally considered a business owner. Rental revenues are taxed in the category of Industrial and Commercial Profits (BIC). To declare them, you have the choice between the micro-BIC regime or the real taxation regime. But first, you have to choose your status according to your situation and wishes. There are two types of status: the Non-Professional Furnished Rental (LMNP), which is the most commonly encountered, and the Professional Furnished Rental (LMP). To be eligible for the latter you must accumulate the three conditions below: 
  • Be registered with the Regime of Commerce and Companies (RCS),
  • Collect annual rents exceeding 23,000€,
  • The amount of these income must exceed the total professional income of the household. 
To carry out your activity as a furnished renter, you must make yourself known to the tax and administrative services. The first of the steps to take is the declaration of existence of your activity to the SIE (Service des Impôts et des Entreprises) in order to obtain a SIRET number. You are then considered as a sole proprietorship subject to the personal income tax system. You can also conduct your business through a joint venture, a SNC or a family SARL. The latter meets the same patrimonial objectives of the SCI which is not recommended in the context of furnished rental. 


TAX REGIMES

Concerning the tax regimes, you can choose between the micro-BIC and real simplified regimes.

The micro-BIC regime:

This regime allows you to benefit from a flat-rate deduction of 50% on gross annual rental income capped at €33,200 for long-term rental for use as a primary residence, seasonal rental, furnished tourist accommodation, rural lodging or mobile home. Bed and breakfast or classified furnished tourism benefit from a rate of 71% up to 82 800€ of annual revenue.

The real tax system:
This system is by far the most interesting because it has the advantage of deducting all the expenses inherent to your furnished rental activity such as loan interest, condominium charges, property taxes, insurance premiums... and accounting depreciation. Thus, you considerably reduce or even erase the tax impact on your rental income.

In the real regime you can generate a deficit (before charging accounting depreciation). In this case, it will be imputed on the receipts of the same nature during 10 years. Note that if you have chosen LMP status, the deficit is chargeable against all your other taxable income for 6 years.

There are two cases where your activity can be tax-exempt:
  • If you rent out part of your main residence to tenants who elect to live there, the income is exempt if the annual rent per m2, excluding charges, does not exceed €184 in the Ile-de-France region and €135 in the provinces. These ceilings are updated every year according to the IRL index of the second quarter of the previous year, 
  • If you rent out bed and breakfast accommodation and the income received does not exceed €760 per year. 

HOW TO DECLARE YOUR INCOME?
  • If you meet the conditions of the micro-BIC regime, you must indicate the gross amount of rental income on the supplementary declaration 2042 C-Pro,
  • If you fall under the simplified real tax regime, you must fill out the form 2042 C accompanied by the tax form 2031and its annexes 2033 (A to G),
  • If the tax result is zero, you have no information to report on the form 2042 C-Pro,
  • If the tax result is in deficit or profit, you will have to report the items on the form 2042 C-Pro "Income from non-professional furnished rentals".

As you will have understood, as a furnished renter, you have administrative and tax obligations to fulfill. What's more, if you are under the simplified real regime, you must keep accounts in the same way as a company, declare balance sheets and income statements via EDI-TDFC (Electronic Data Interchange - Transfer of Tax and Accounting Data). 
We recommend that you have it done by a chartered accountant.
NB: these accounting fees benefit from a tax reduction equal to two thirds of the expenses incurred.


OUR CPA PARTNERS

ComptaCom
Chartered accountants specialized in furnished rentals.
ComptaCom offers you a 50€ discount on their fees for the first year.
To find out more and benefit from their advice:
>> make an appointment with a ComptaCom consultant
>> contact ComptaCom

ARK Conseil
ARK offers you a 10% discount on their fees for the first year by mentioning MorningCroissant.
>> contact ARK Conseil


ADMINISTRATION WEBSITES
In order to obtain information relating to the declarations to be carried out, here are two official & governmental websites: 


For the record, there is no  ownership relationship between MorningCroissant and our CPA partners.
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