Renting apartment and taxes etc

[Mbk]

I've owned a 4 bed apartment in Chamonix for a number of years. We rented the place out while we weren't there but the rent really just covered the mortgage (500E/month) and wasn't done to make a profit. I haven't paid any tax on this (here or in France) - should I of?

Now the person who has been renting the place out wants to move in with her boyfriend but has offered to rent the place through AirB&B. I'm guessing the income would be a lot higher (I'm guessing 800E/week in winter but less in summer). The mortgage is now nearly paid but maintenance and cleaning would need to be paid, I'd also want to pay the lady reasonably well for looking after everything for us. The advantage to us is that we could use the place more often. Does anyone know how to approach all this with taxes (UK and France)?

Any other opinions?

[EuroTrash]

Rental income from a French property is taxable in France.

[alittlebitfrench]

I don't understand the thread or the question ?

You have been renting a flat out in Charmonix without paying any tax in France on the rent and you are questioning if that is legal. LOL.

Is it a verbal contract ? Why would would you think that is legal/above board.

I am amazed you have not been caught.

[Mbk]

Thanks for the very fast responses but oh dear ... paying tax never really came up - the rental was more of a favour that just paid the bills rather than a business. Is there an easy way of paying the tax owed? any clue how much it would be? rental has been around 500 Euro/month though the place hasn't always been rented. How far back would they want to go? How far far back could they go? I'm not sure I even have records. If it's crippling then I might have issues and I'd might need to rethink everything.

Perhaps I should just be thankful for the break and try to get everything as legal as possible going forward if the place starts getting rented out on a weekly basis.

Do I get taxed on this in the UK too? is it actually worth the effort renting places?

[EuroTrash]

As a UK taxpayer you have to declare all your worldwide income to HMRC. The DTA should protect you from actually paying two lots of tax on it.

Since it's an irregular situation you would have to go and discuss it with the French tax office. It's impossible to second guess what attitude they would take. But, if you say nothing and keep renting it out and they happen to pick it up, which is increasingly likely because there is more and more information sharing between the two countries' tax offices, they will obviously be a lot less sympathetic than if you go along and confess. The way it works in principle is that penalties are a percentage of the unpaid tax and there are 3 percentages, a lower rate for a genuine mistake, a mid rate for just plain failing to declare but not actively going out of your way to conceal the income or falsify records, and a top rate for when someone sets out to intentionally defraud the fisc, which can be anything from having the money paid into someone else's bank account or using a false name, to the more complex kinds of tax fraud that big businesses get up to.

In practice what usually happens when the fisc suspect/know that somebody has rental income that they haven't been declaring, is that out of the blue they send a bill for a very large figure apparently plucked out of the air. This is win-win for the fisc because the person then has two options; either they pay the bill and that's an end of it for them and the fisc is very happy, or they have to contest it. In order to contest it they have to provide full paperwork to prove exactly what the correct figures should be, and then the bill is revised. (Or alternatively I suppose, to prove they haven't been renting it out; but if the fisc feel sure enough to send a bill, then usually they have information and they are right.)

[Chancer]

In practice what usually happens is..........................................................................

 

Nothing at all, a Google search for accomodation in my area will throw up more non declared hébergeurs than those paying taxes whether it be via their own web-sites or AirBnB, most of them charge in £'s, its only the honest that make the declaration at the Mairie who then get stuffed for paying  taxe de séjour, they are not even bothered to do a simple search to bring the others into line, the same goes for les impôts, they are far too busy collecting money from the compliant to go chasing the non compliant, its only denonciation that will start anything.

 

I declared myself after being completely off the radar for 10 years, no talk about fines or penalties, just a "how many years do you wish to go back Monsieur" and you could tell that they hoped it would not be too many, I chose 3 years. They had in fact got Wind of me a few years before and asked me to submit a declaration, i had written back asking for a decision as to whether I needed to or not and never heard any more, I asked about this, they looked back through the file and found that it had been deemed classé AKA thrown in the bin as being too much hassle.

 

Its for you to decide regarding the past, for the future income just declare it as revenu non pro BIC, one line on the tax return.

[Mbk]

Regards HMRC - there was no income in the UK while the place was rented. It simply paid the mortgage and whatever extra was made went on maintenance. With the possible new arrangement there probably will be income involved and that's partly why I started asking.

It's difficult to estimate these things but I'm guessing it will make around 16K Euros a year. 4k will likely go to maintenance and cleaning. Another 4K would probably go to the lady organising the rental and doing cleaning etc. Hopefully this will leave me with around 8K Euros which would most likely probably stay in France. Every number here is a very rough estimate.

Would/should I pay tax in France and in the UK? What sort of numbers do they take? Is it worth it in other words. If I want to declare the rental going forwards then who do I talk to in France?

and what does non pro BIC mean?

[Chancer]

You are confusing income with profit, if you declare Under one of the forfait regimes like micro-BIC you will be taxed on your income profit doesnt come into it but you will get a fixed allowance (abattement) of either 50% or 71% as notional expenses so you only pay charges and taxes on the remaining 50% or 29%.

 

If your actual costs including depreciation, renewals etc go beyond 50 or 71% then hypothetically choosing a régime réel would be better but the accountancy fees would pretty much wipe out the remaining profit, if you add a zero on the end of all your figures then a régime réel is the one.

[Mbk]

Thank you for all your help guys. I'll admit it's a bit uncomfortable realising you've strayed, admittedly more due to stupidity, but nevertheless. I'll try and straighten things out. I'll very probably be back with more questions.

Thanks again