WHAT ARE THE TAX ADVANTAGES OF BUY-TO-LET STATUS?
With a French buy-to-let scheme you can deduct from your rental income all charges relating to your French-based investment and therefore collect rent net of tax and social security contributions.
- Loan interest
- Property taxes*
- Lawyer's costs
- Fixtures, fitting and decoration work*
- Joint ownership charges* (definition to be added to the glossary)
- Accounting company fees
- Amortisation of the property
- Depreciation of the furniture
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WHAT IS THE TAX STATUS FOR BUY-TO-LET?
Buy-to-let incomes are classified under the fiscal category of "ICE" (Industrial and Commercial Earnings) and not property income. With buy-to-let status, it is possible to use amortisation to alleviate taxes and social costs.
WHAT ARE THE AMORTISATION DEDUCTIONS*?
For a furnished rental you can amortise up to 85% of the property value of your property and 100% of the furniture. The land value (which represents an average of 15% of the total of the whole property investment) cannot be amortised according to French law.
Amortisation* is linear:
- Five to ten years for the furniture and fittings, which represents an annual amortisation of 10% of the value of the furniture
- Thirty years for the property (ie, 2.5% to 4% per year)
The amortisation of the property and its furniture can reduce your taxable accounting profits to zero. If the result is negative, the amortisations which have not been used are carried forward with no time limit.
Rental properties are not subject to ceiling rents, nor to the tenant's resources, nor to geographical zoning.
Interest and loan charges are tax-deductible. By adding the annual amortisation to any deferred amortisation from previous years, you can bring your taxation and social security contributions to zero.
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