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Tax: how to declare your property income quickly? Help for new landlords in 2021

Everything you need to know about the property tax return for new owners

The tax return depends on two parameters: the type of rental (bare or furnished) and the amount of its property income. In order to help new owners, Flatlooker, an online rental and management agency, provides an update on the steps to be taken to complete your declaration correctly and choose the most suitable plan.

Bare rental

For the empty rental, the income must be declared in the category of property income, there are two different tax regimes. If the rents do not exceed €15,000, the owners have the choice between the simplified micro-land regime and the real regime. The main difference is that the abatement in micro-land is a fixed percentage whereas in the real regime, it is defined by the amount of deductible expenses year by year. You must tick the “property income” box when you choose the categories of income received at the beginning of the declaration.

Bare: micro-land regime

Gross rental income (rent collected deducted from charges) must not exceed €15,000 for the tax household excluding VAT and deductible charges. The declarant then benefits from a fixed abatement of 30% on this amount. Please note, it is the gross amount before deduction that must be entered in the declaration (box 4BE of declaration 2042) and not the amount deducted. The attached document is not to be completed.

Naked: Real Diet

This regime is compulsory if the gross income is greater than €15,000, in which case the owner must complete annex 2044. The gross income is taxable under the actual regime and is equal to the difference between the receipts collected and the deductible expenses. The deductible charges are in particular the costs of administration and management, works, taxes and duties, insurance premiums, provisions for co-ownership charges, loan interest, etc. If the deductible charges are lower than the gross property income, then the owner finds himself in a situation of net property profit. If they are higher, then it is a net land deficit. If the result is a net property profit, it must be added to other income to be subject to income tax (box 4BA of declaration 2042).

When it is a net property deficit, it is chargeable to the overall gross income of the taxpayer within the limit of €10,700 excluding specific provisions. The deficit is to be reported in box 4BC of declaration 2042.

Furnished rental

Furnished rental activity can be exercised according to two statuses: non-professional furnished rental (LMNP) and professional furnished rental. The status is defined by tax household.

To be a professional furnished rental company (LMP), you must meet the following two conditions:

  • The annual revenue withdrawn from this activity by all members of the tax household must exceed €23,000
  • The revenue exceeds the income of the fiscal household subject to income tax.

You must tick the box “Professional industrial and commercial income” for LMPs, and the box “Non-professional furnished rentals” for LMNPs when you choose the categories of income received at the beginning of the declaration.

Regardless of the status, the owner has the obligation to carry out certain procedures, such as obtaining the SIRET number. You must contact the registry of your municipality. The status does not define the tax regime, it is always up to the owner to choose which is the most advantageous depending on the situation: micro or real.

Furnished: micro-BIC regime

The micro-bic regime applies when the amount of revenue for the previous year or the year before last does not exceed:

  • €72,600 for rentals of furnished residential premises;
  • €176,200 for rentals of classified guest rooms and furnished tourist accommodation

For the non-professional furnished rental status (LMNP), a flat-rate allowance of 50% is applied to income from furnished residential premises. The amounts received should be indicated in cells 5ND, 5OD or 5PD. For classified furnished tourist accommodation and bed and breakfasts, a fixed abatement of 71% is applied. The amounts received should be indicated in cells 5NG, 5OG, 5PG.

For the professional furnished rental status (LMP), the amount of sums received must be indicated in lines 5KP, 5LP or 5MP. The standard reductions are also 50% for furnished rentals, and 71% for furnished tourist accommodation.

The status of LMNP allows you to benefit from a significant reduction of 50% when you choose the micro-BIC scheme. If the deductible expenses are lower than this allowance, it is generally this solution that we recommend to our owner clients. » confirms Nicolas Goyet, President of Flatlooker

Furnished: real regime

For LMPs, within the framework of a real profit regime, their income must be declared in the additional document 2031. The household’s deficits resulting from the activity of non-professional furnished rental company can only be set off against income from the same activity, over a period of 10 years.

For LMNP, the profits from furnished rentals must be indicated in the boxes from 5NA to 5PK.

If it is a deficit, it must be indicated in the boxes from 5NY to 5PZ.

For information: Boxes 5NA, 5OA and 5PA for the profit, or 5NY, 5OY or 5PY for the deficit, are to be completed if the owner has approved an OGA (approved body) or a tax auditor. This membership makes it possible to avoid the increase in taxable profit for non-membership of an OGA, it should be noted that the 2021 finance law will eliminate the increase from 2023.

In both types of rental, if the owner has opted for the real regime, he is committed to declaring his taxes under this regime for a minimum of 3 years. It is preferable to project yourself over 3 years in terms of your expenses before choosing your tax system.

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