I own an apartment or a chalet in the mountains from which I earn rental income. Can I choose between several tax systems?

If the property is furnished, you can choose between the micro-BIC or the simplified real-BIC system. Take care, however, if you have acquired this property under joint ownership or if you are married under a separation of goods, or through the PACS system, then you automatically fall under the simplified real-BIC system. Similarly, if your rents exceed 70,000 euros, then you also automatically fall under the simplified real-BIC system.

What are the advantages of the simplified real-BIC system?

The simplified real-BIC system allows you to deduct from your rental income all expenses related to the rental of a property (local taxes, co-ownership fees, insurance, interest and loan insurance, maintenance or renovation works) as well as depreciation (linear deduction of 90% of the value of the property over a period of 25 years and 100% of the value of the furniture over 10 years). In most cases, the system allows you to avoid paying tax on your rental income.

And those on the micro-BIC system?

The micro-BIC system has the virtue of simplicity: it does not require the filing of a return. Simply report the amount of your annual turnover on your income tax return. You are then taxed after receiving a 50% reduction or, if your property is classified as furnished for tourism, a 71% reduction.

Can you move from one tax system to another, and when or why should you change?

It is possible to switch from the micro-BIC system to simplified real-BIC by filing an option with the corporate tax department to which the rented property reports before the 31st January of the year concerned. However, it is always best to perform a personalised simulation to determine which system best suits your situation.

Does the number of weeks rented change anything?

For the simplified real-BIC system, the legal texts do not define the number of weeks rented. On the other hand, if the owner occupies their property, they must declare their occupation time, valued at 75% of the public rate. In return, they will be able to deduct annual charges and amortisation over the full year.

New or old accommodation: any differences?

The tax rules are the same whether the dwelling is new or old. However, in the case of older accommodation renovations, it is preferable to be registered for the simplified real-BIC system in order to be able to deduct the renovation works amount.

Is the nationality of the owner of any consequence?

The taxation of non-residents is similar to that of residents. The tax rate is fixed at 20% regardless of the composition and income of the tax household. Non-residents are also subject to social levies (17.20%) in case of profits. However, there are specific clauses for non-residents whose rental income is subject to VAT.

Do you have any questions about this? Please contact us and we will be happy to answer your questions