Tax on rental income

[Tia]

I am told you can declare the rental you receive either in France or the UK anyone have any views as to which is best and what it entails please. Also can you off set tax against the interest on a french mortgage and expenses as you can on a Uk rental property - x

Meant to add I live in the UK

 

[Maricopa]

Tax on rental income is payable in the country in which the property is situated, you cannot choose. Makes no difference where you live.

Sorry, don't know the answer to your second question.

[NormanH]

As you live in the UK I presume that this is a résidence secondaire?

[Tia]

Yes we only use it as a holiday home a couple of weeks a year and are looking to rent as holiday let during the summer

[Pickles]

[quote user="Tia"]I am told you can declare the rental you receive either in France or the UK anyone have any views as to which is best and what it entails please. Also can you off set tax against the interest on a french mortgage and expenses as you can on a Uk rental property - x

Meant to add I live in the UK[/quote]

You have to declare it in France and the UK if UK-resident; in France, furnished lettings come under the BIC tax regime, and I suspect that your income would fall into the Micro-BIC regime, where you have a fixed deduction of 50% of the income to cover ALL costs, including interest payments.  Hence you only pay tax on 50% of your rental income. Because you are UK-resident, you will be taxed at a fixed rate of 20% (ie no personal allowances), so you will pay 20% of 50% of your total rental income - ie the tax will be 10 % of your rental income.

(note: the above figures have been edited because I think I put in what they were for 2008: 2009's deduction is lower)

Then you declare the income and tax paid to HMRC in the UK. For the current tax year, if the property is available for 140 days in the year and is actually let for 70, then you can benefit from the advantages of the Furnished Holiday Lettings tax scheme (note that this will not continue after April 2010)

If you don't let it enough, then although you can claim expenses as deductions including mortgage etc (as long as the mortgage is clearly for the purchase of the property) you then have to apportion the costs and expenses to reflect your usage versus lettings (in fact you would have to do this as well for FHLs).

Regards

Pickles

[Tia]

Thanks for that I was hoping you would reply - very helpfull

Could you also tell me for future reference what forms I would need to declare this and where to get them from please

Many thanks

 

[Pickles]

[quote user="Tia"]Could you also tell me for future reference what forms I would need to declare this and where to get them from please[/quote]

The standard form, 2042, plus 2042C.

You can get them from a local tax office in France or from

CENTRE DES IMPOTS NON RESIDENTS NOISY-LE-GRAND

10 RUE DU CENTRE

TSA 10010 93465 NOISY-GD CEDEX

tél. : 01 57 33 83 00

Mél. nonresidents@dgfip.finances.gouv.fr

Or you can download them from www.impots.gouv.fr

Regards

Pickles