Tax on rental income?

[Fiona]

Hi, we are looking into buying one or two appartments/houses here to do up and rent out long term.  We are currently renting out our house at home which generates a small income for us after we pay our rent and standing orders here.   We have been in France since March and after our rental agreement is up here (6 months) plan to buy a place but are keeping our budget down in order to keep our mortgage repayments the same as the rent we currently pay.  Therefore we hope to be able to generate further income to live off by buying investment properties to rent out long term.  Can anyone please tell me what the income tax rate (and other charges) we would have to pay on rental income here?  Worst case scenario is that it would be our only income as we currently have no work as yet (but aim to change this). 

Many thanks

Fi

[parsnips]

[quote user="Fiona"]

Hi, we are looking into buying one or two appartments/houses here to do up and rent out long term.  We are currently renting out our house at home which generates a small income for us after we pay our rent and standing orders here.   We have been in France since March and after our rental agreement is up here (6 months) plan to buy a place but are keeping our budget down in order to keep our mortgage repayments the same as the rent we currently pay.  Therefore we hope to be able to generate further income to live off by buying investment properties to rent out long term.  Can anyone please tell me what the income tax rate (and other charges) we would have to pay on rental income here?  Worst case scenario is that it would be our only income as we currently have no work as yet (but aim to change this). 

Many thanks

Fi

[/quote]

 Hi,

     If you rent unfurnished there are several regimes for tax , the regime réel where you deduct your actual expenses before the rents are taxed at your marginal rate (which if this is your only income, will be low or nil --you will however pay social charges at 12.1% on the taxable rent); or if your gross receipts are less than 15000€(2008 fig.) you will be automatically subject to the "microfoncier" regime which gives a set 30% allowance against your gross rents before being taxed as above. If you think you would be better off on the "réel" regime you can opt for that ,but your option is binding for 3yrs. There are also a range of "special" regimes which give tax advantages in return for providing "social housing" under controlled conditions -too complicated to describe here.

     You should discuss with your tax office ,or if your french is not adequate, find a tax office which can supply an english speaker to advise you.

[NormanH]

You also have to pay CSG and other taxes which come to about 11% a year (may have gone up this year, but that's what I have been paying.

As a rule of thumb it is about a month's rent, and has to be paid around November, depending on your region.

On the other hand part of this is off-set against your tax the next year.

Be very careful about relying on income from rents.

If you search this and other Fora you will  find plenty of advice, but the two biggest problems is the security of tenure given to tenants who can be extremely difficult to remove even if they don't pay, and the cost of re-furbishing after problem clients.