The taxation of furnished accommodation, particularly those offered on platforms such as Airbnb, has recently undergone significant changes in France. These changes aim to better regulate the French furnished rental market, which has experienced a meteoric rise in recent years, particularly in tourist areas.
As an owner or investor, it is essential to understand the new French tax rules and their impact on your rental income to anticipate and optimize your asset management.
The two French tax statuses of furnished accommodation
In France, furnished rentals are subject to two separate tax regimes: the non-professional furnished rental regime (LMNP) and the professional furnished rental regime (LMP).
The LMNP regime is historically more advantageous for owners thanks to certain tax loopholes and interesting deductions on rental income. However, this tax loophole, particularly beneficial to Airbnb and other platform renters, is currently being reformed.
The LMP regime , for its part, applies to owners generating more than €23,000 in annual rental income or whose furnished rental activity represents more than 50% of the tax household's income.
What changes in 2024
In 2024, a major reform will shake up the French taxation of furnished accommodation, particularly for tourist rentals. The Council of State recently cancelled the maintenance of certain tax loopholes, in particular those that benefited owners offering accommodation on Airbnb. From now on, the French tax framework will be tightened, limiting the advantages for non-professional lessors.
Indeed, the reduction applied in France to income from furnished rentals classified as "tourism" (notably Airbnb) will be revised. Thus, the flat-rate reduction goes from 50% to 30% for unclassified furnished tourist rentals. While furnished rentals classified in a tense zone retain a reduction of 71%, and those in a non-tense zone benefit from a reduction of 92% if they do not exceed €15,000.
Other major tax changes for 2024 concern the French micro-BIC regime for unclassified furnished tourist rentals. The annual rental income threshold to benefit from this regime is lowered from €77,700 to €15,000. Beyond this amount, owners will automatically switch to the actual regime.
At the same time, new reporting obligations could still be put in place, strengthening tax control over this booming sector.
Impact on furnished rental owners
These changes will have a significant impact on furnished rental owners in France. For some, this could mean a decrease in the profitability of their rental business. Investors will have to reassess their strategies in order to adapt to the new tax rules.
Those who rely primarily on this source of income will likely need to consider adjustments, including diversifying their investments or seeking to obtain professional furnished rental (LMP) status, which is potentially more advantageous in certain situations.
Blendy supports you
At Blendy , we know how complex tax obligations related to wealth management can be to understand. This is why we continuously support our French and International clients to understand these obligations and adapt their strategy accordingly.
With our accounting and financial expertise, we help you optimize your income while adjusting your tax burdens. We ensure that your accounts are perfectly maintained and up to date, and that your declarations comply with the new legal obligations.
To learn more about our services related to corporate and executive taxation, contact our team today.
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