Gite Costs.

[EnglishBadger]

Hi to everyone, My wife and i are thinking of buying two properties in Brittany with the thought of living in one and renting the other out as a holiday cottage. We are not stupid and know that we will not make a fortune, if only just a living but we just hoped someone out there could spare a few minutes in answering our few questions:

1) Do you pay income tax on 100% of the rent income or can you offset electricity etc? Is there a personal tax allowance before income tax kicks in?

2) How often do you need change the furniture? Do you take a breakages deposit on arrival from clients?

Thanks

Gary + Michele.

[Eslier]

Gary & Michel, welcome to the forum and I hope you find the advice here useful.

The answers to your questions are, I'm afraid, going to be dependant on certain variables.  If you have a spectacular house with 6+ bedrooms to rent out with a pool, and in one of the most poplular areas then yes it is possible to earn a living, just, with one gite. Such a property might earn you up to around £20k.  If, on the other hand you have a 3 bedroom house with no pool in an inland location then you are liely to find that nothing more than about £5k per year is achievable. The figure I have given are, of course, before running costs which can mount up especially if you invest in good marketing. Incidentally, I have quoted figures in £ as, in the area you are looking, you should be able to obtain higher revenue letting to the British market.

If your gite is your only source of income then you may well discover that you need to register as a business and you will incur cotisations which will make a huge dent in your income. (Look through other threads on this subject for more detailed information). So . . .

1) It is unlikely that you will earn enough to pay any tax but the cotisations (healthcare, pension social security etc.) will still need to be paid - these are likely to be around 4000€ in your first year.  If your gite only provides a secondary income and one of you is employed in France then you may not need to register and pay the cotisations.

2) How often you need to replace furniture will depend on the quality you start off with, how many weeks per year your gite is let (long winter lets can be bad news for wear and tear) and luck. The best advice is to allow a sensible budget - say 1500€ each year for decoration and renewals and use it. This will keep you on top of things.

3) Yes, most gite owners take a security deposit but this is often only a nominal amount of around £150 or so which wouldn't cover the cost of, say, replacing a sofa. The security deposit is only there as an incentive for your guests not to trash the place or leave it really dirty.

[Ianhaycox]

You may find the following helpful, http://radio.weblogs.com/0136203/2006/06/15.html#a422

[Eslier]

Ian, your article is very informative however, theer is one very important fact that you have not made clear. You state that "you are not obliged to register at the Chamber of Commerce" which is not always the case. If your gite rental business is your main source of income, then in most cases you are required to register. There are well reported variations upon this advice from one region to another but, in more recent times, the professional advice seems more often than not to register.

There was a very interesting and informative article from Miki not long ago on this subject, the source of information being Gite de France. It seems that the authorities are now starting to clamp down on this.

[Miki]

The mystery thickens.

I can call a fonctionaire right now and receive an answer exactly as

Ian has quoted in his blog and the none requirement to register. I can

call the same building and get another person and another answer that

says, that if half of your money or more derives from Gîtes/CdH's, then

they want you to register. It is a maze, it really is and that is why,

as we speak, the French are trying to sort this all out and as I said

before, G de Fr are now in consultations with the Ministers concerned.

In a way, we Brits are perhaps somewhat to blame (blame is not really

the word but....) as I have probably mentioned several times over the

years, many of us have taken gîtes, B&B's etc to a more "dynamic"

stage. We take old buildings and make them in to complexes, some take

on  big houses and turn them in to wonderful B&B's and all

this was done, mostly legally.

So from what was once an agricoles domain, it is now open to not just the farming fraternity

but for the last, I would say, 15-20 years, Brits (and other

nationalities, of course French being most dominant) have come along

and built themselves little businesses, which to be frank, was not what

the original concept was about (Yes I know G de Fr are 50 years old but

the last two decades have seen massive changes). The early days with G

de Fr, with all

the grants and assistance, was for the farmer with extra rooms,

dependances to let to the tourists/commercants etc visiting their area.

They were simply told that most of the money taken could be kept and

just a small amount declared (this is really just as it is today, more

or less).

This of course, was added to the turnover of their actual work.

All, or at least most of those letting places at the start of the 90's,

of course had to have a C de Sèjour and to get that, one had to prove a

certain income or sufficient money in the bank (pensions were accepted)

or one bought a business. Now we have a situation, where since around

2000 the CMU has come along and this has allowed folks to get health

cover and without having to register this type of business (originally, one

had to register or one could not obtain health cover other than going

private) this also meant paying some amount to URSSAF plus Retirement

payments as well as health cotisations.

So as ever, one is led by whatever office, in whatever twon, in

whatever dept and to whom one speaks, as to what youw ill be told.

Things are certainly afoot to regulise ita ll but a sit stands, unless

they change the rules for the farmers, there will be conflicting

answers. But, let's go on how it is with trhem, they have other

monies/work to which they ally their earnings from B&B's and Gîtes,

whereas 90% plus of Brits have it as their main source of income. So,

it is quite a different scenario but one which has been so since 2000

and now I guess, with pensions, hospitals etc in need of resources, it

is not surprising that this industry will be scrutinised. Whether this

will be done within months or years, we can but keep our eyes on the

govt sites.

Ian, as an aside, the social security tax you talk of, is

CRDS,CSG  ? There are deductions before this tax is applied of

course.

The C de Com may pass on your information to the mutuelles etc for health and retirement payments  but

do not in fact deal with payments, well not for us anyway. Yes, I have

been told that INSEE can offer Siret numbers but if they actually do

and if anyone has done so, it would be nice to know why and for what

reason ? I can think of it being useful for getting a card machine,

having an easy membership to Metro or Promo but for what other reason?

It is now going to more than courteous to inform the Impots and Mairie,

it is now gong to be obligatory. Let's be fair here, one is changing a

private abode/barn or whatever, in to something that neighbours may not

like and it is only right that any neighbours are informed by the

maire. My guess is there will be not normally be any problem but one

never knows. For the record in your blog also, the abattement is going

down to 68% from 72% next year.

So, we shall all know more in the future but when, well it is LBF !!

[The Riff-Raff Element]

I dislike quoting selectively, but it makes the reply more tidy....

So from what was once an agricoles domain, it is now open to not just the farming fraternity

but for the last, I would say, 15-20 years, Brits (and other

nationalities, of course French being most dominant) have come along

and built themselves little businesses, which to be frank, was not what

the original concept was about (Yes I know G de Fr are 50 years old but

the last two decades have seen massive changes). The early days with G

de Fr, with all

the grants and assistance, was for the farmer with extra rooms,

dependances to let to the tourists/commercants etc visiting their area.

They were simply told that most of the money taken could be kept and

just a small amount declared (this is really just as it is today, more

or less).

What has also changed is the impact that tourism has on the French

economy. France is the most-visited country in the world, and tourism

is the massive contributor to her balance of payments. This is a

significant shift from 30 years ago.

Things are certainly afoot to regulise ita ll but a sit stands, unless

they change the rules for the farmers, there will be conflicting

answers. But, let's go on how it is with trhem, they have other

monies/work to which they ally their earnings from B&B's and Gîtes,

whereas 90% plus of Brits have it as their main source of income. So,

it is quite a different scenario but one which has been so since 2000

and now I guess, with pensions, hospitals etc in need of resources, it

is not surprising that this industry will be scrutinised.

I  can't, obviously, comment on France as a whole, but I know of

no farmers around here who are letting rooms any longer. The main

reason, I think, for this is that the role of the "farmers wife" has

changed. Previously letting out a room or two was very much in the

female domain and, along with a couple of other activities, provided

her with "corner of the apron" money. Now, many farmers wives have full

time jobs outside of the home to make ends meet. Wealthy farmers

certainly exist in France, but they are not the rule, whatever the

Daily Mail may think.

I agree that the industry will be scrutinised; I don't think myself

that it is well understood by the higher reaches of the State, though

they do comprehend just how much money it puts into the wider economy.

Certainly our local tourism authority are very concerned about

improving overall levels of quality which they see as key to

maintaining visitor levels in the coming years in the face of

increasing competition from more "exotic" destinations.

Personally, I think clearer regulation would probably be a good thing,

though I would rather hope (a vain one, probably) that consultation is

rather wider than just GdF / Clévacances. To an extent I think that

they are both mired in the past. At the suggestion of the head of

tourism in the departement (who is also our local deputy and who owns a

very nice gîte himself), we had a look at advertising with Clévacances

and found that we didn't meet their ideas of "quality." This was

something of a disappointment, but also a surprise as we (and our

guests, if evidenced by the level of bookings and, more pointedly I

suppose, re-bookings) were rather under the impression that the product

on offer was quite good...

[Patmobile]

I rather hope they will have plenty of consultation with Gites de France which is probably still dominated by the agricultural lobby and hopefully will stick out for the retention of a large rabattement.  I don't want the rules to change - the generous allowances in the existing tax regime suit me fine, and though a couple of our cottages are in Gites de France, we don't rely on their reservation service for anything.

As for the "quality" standards of Gites de France and Clevacances, these seem to vary from one place to another, but they are not hard to achieve, particularly if you get a copy of their quality scoring matrix.  You then just make sure you score all the necessary points by having such things as a pressure cooker (return it to the shop after inspection) an oilcloth table cloth, a chair and a bedside table & lamp by every bed, etc.  It's also helpful to know the minimum required areas for bedrooms, bathrooms, etc.

Points are even scored for the basket of freeby goodies you put out for arriving guests.  Gites de France suggest some vegetables and salad stuff.  Most British visitors seem to prefer finding a bottle of wine, some tea and some chocolate biscuits.

Patrick

 

[The Riff-Raff Element]

[quote user="Patmobile"]

As for the "quality" standards of Gites de

France and Clevacances, these seem to vary from one place to another,

but they are not hard to achieve, particularly if you get a copy of

their quality scoring matrix.  You then just make sure you score

all the necessary points by having such things as a pressure cooker

(return it to the shop after inspection) an oilcloth table cloth, a

chair and a bedside table & lamp by every bed, etc.  It's also

helpful to know the minimum required areas for bedrooms, bathrooms, etc.

Points

are even scored for the basket of freeby goodies you put out for

arriving guests.  Gites de France suggest some vegetables and

salad stuff.  Most British visitors seem to prefer finding a

bottle of wine, some tea and some chocolate biscuits.

 

[/quote]

It was something a bit wierd to with the square footage of a loo or

something anyway that was a result of the fabric of the building that

we couldn't change that meant that Clévacances "could not catagorise

your property" so we gave up. Welcome packs are always, well, welcome.

We aim to provide the ingredients for a "picnic" meal (bread, cheese,

wine, beer, biscuits, fruit, etc) so that our guests won't actually go

hungry if they fail to make the supermarket...

[nimportequoi]

Yes, there are some things in the fabric of a building you can't change - we have a main beam in the living area just slightly lower than the 2m required in one cottage and wood central heating in another, so on those grounds both were automatically disqualified. I realise they have to have some standards, but the rigidity of their criteria seems a little old fashioned to me too. We have never had any complaints from either UK or French guests- most French guests say our accommodation if far superior to the G deF they have had experience of. However, like Patmobile, I appreciate the lobbying both G de F and Clévacances do on behalf of all gite and B&B owners in France, even if my accommodation doesn't tick all their boxes!

[BJSLIV]

Much of the pressure to do something about the unfair competition from the unregulated Gite / B&B market is coming from the hotel sector.

I'm not sure whether its the "Logis de France" types who are complaining or the big groups such as  Accor  & Envergure etc.

If it is the big groups it will be another example of modern business versus old style family enterprise.

[Miki]

It is not only the big hotels bur campings and smaller 1 star hotel

family type affairs as well (many on their last legs and cheap to pick

up, as many have not kept up with the modern trends and the

owners simply do not have the large amount of money needed to upgrade

them) . Whenever the French tourist industry suffers a slump of

whatever magnitude, in come the cries of unfair competition and always

aimed at Gîtes and CdH's. Personally I have no qualms about gîtes being

regulated but not neccessarily being graded as such but simply for

those that are not with G de Fr etc, just be given a standard label by

some body,  that says yes OK, clean tidy and acceptable.

This will allow those who do not wish to pay out for membership to gain

a pass but of course, a good grade with someone like G de Fr, however

one feels about them, will in most cases, pull in more than anyone else

from the French themselves. As for the Brits that rent their places

solely to the Brits through British adverts, not sure what will happen

there but I would love them to be brought in to the net, making it a

level playing field for all and ensure that they too are paying their

bit in to the coffers here. It was bandied about years ago that the tax

offices were fully aware of Brits in Chez Nous etc but personally, I

have never heard of anyone having been tugged in for not being

registered at the tax office and I would have thought that this was a

golden opportrunity to raise dosh but probably small fry in their eyes

perhaps?

[The Riff-Raff Element]

[quote user="SusanAH"]Yes, there are some things in the fabric

of a building you can't change - we have a main beam in the living

area just slightly lower than the 2m required in one cottage and wood

central heating in another, so on those grounds both were automatically

disqualified. I realise they have to have some standards, but the

rigidity of their criteria seems a little old fashioned to me too. We

have never had any complaints from either UK or French guests- most

French guests say our accommodation if far superior to the G deF they

have had experience of. However, like Patmobile, I appreciate the

lobbying both G de F and Clévacances do on behalf of all gite and

B&B owners in France, even if my accommodation doesn't tick all

their boxes![/quote]

That was it! Beam height of 1.92m. And they didn't want to count the

(very nice) ensuite "salle d'eau" as a bathroom, so we were one

bathroom short. In the other two properties, each had a door lintel too

low.

[nimportequoi]

G de F also said I would have to halve my rental prices (and my accommodation is not the most expensive I have come across in this area), so with that added to the comission they take, it probably was just as well my accommodation didn't fit their criteria as my income would have been severely reduced.

[The Riff-Raff Element]

[quote user="SusanAH"]G de F also said I would have to

halve my rental prices (and my accommodation is not the most

expensive I have come across in this area), so with that added to

the comission they take, it probably was just as well my accommodation

didn't fit their criteria as my income would have been severely

reduced.[/quote]

Quite. We are also just about the most expensive in the area, though I

suspect our operating expenses are also about the highest. We are also

fully booked May to mid-September, which is what we consider our

"season". Very few people come to the Vendée for out-of-season breaks,

though we are suddenly getting interest in the idea from our summer

guests - can we provide a roaring log fires? Why, yes we can! If the

proof of the pudding were in the eating, this should be taken as some

measure of quality...but how to put a value on it?

No one has ever suggested that our beams are on the low side.

[EnglishBadger]

Hi

We would just like to thank everyone for their time, words and advice. We hope we can repay you with our limited knowledge one day.

Regards

Gary + Michele.