| LUXURY PROPERTY – RENTAL INCOME TAX | There are two types of rental income tax in France; Revenues Fonciers applied to land and unfurnished lettings and Bénéfices Industriels et Commerciaux (BIC) which applies to furnished lettings.
If you are a resident in France you will also have to pay the prévèment sociaux, social welfare levy, taxed at a rate of 21.1 percent.
The BIC and Micro-BIC are associated to holiday rental properties. If the income from a furnished property is under €32,000 per tax year, you will be taxed at a rate of 50 percent of the gross rental income. The other 50 percent is deducted as presumed expenses.
If the rental income is over €32,000 per tax year as will be the case for most luxury property, the tax will be applied according to the Régime Réel Simplifie (RRS). Under the RRS you deduct the expenses related to the letting of the property such as mortgage interest, depreciation, repairs and insurance. This tax decision exists for three years even if the rental income drops.
You must also be aware that if you are a UK resident you will be liable to pay UK income tax on your luxury property even if the money stays in France. However, fortunately there exists a double taxation treaty between France and the UK which means any tax deducted through the French system is offset against what you pay in UK tax. You should also note that the UK tax year runs from April to April but in France it runs from January to January.
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