Definition and characteristics: The furnished rental is often appreciated by tenants “in transit” who do not intend to settle for a very long period in France, as interns, students, employees travelling on business or people passing through or tourists. The advantage for the tenant is not having to move or buy new furniture and enjoy accommodation equipped and ready to move into without stress. For housing to be called “furnished”, the owner must rent the property with all the furniture required for the daily life of his tenant.
What is the tax treatment? In terms of taxation, furnished rent involves a change in tax status for the owner, because rents are taxed according to the rules on industrial and commercial profits (BIC) and not under the land revenue. However, there are two schemes for BIC:MICRO-BUSINESS
If the amount of rent and charges that you receive do not exceed 32,600 Euros for the year, you are subject to a flat tax system called “micro-enterprise”. This micro-BIC regime allows a flat tax reduction of 50%, beyond this limit or if the overheads are high, then the Real Income Plan applies. Warning: This means revenues, that are paid by the tenant to the owner, i.e. charges and rents! Not to be confused with the benefit that is: rental income – expenses disbursed. The 50% reduction is no longer available when rental income exceeds € 32,600 The choice of system is before February 1 of each year and is valid for 2 years, renewable by tacit agreement.REAL SYSTEM
Above the rental income of € 32,600 the REAL system is required. but the owner can deduct actual total expenses that are incurred : i.e. maintenance and repair costs, loan interest, depreciation of furniture and improvements, expenses (notary fees), management fees and insurance, all count towards this total. The choice of systems depends on the tax situation of each owner This is why we advise you to turn to the tax department, accountant or tax advisor.