Property rental income (taxation)
The tax category in which rents received by a landlord from unfurnished lettings are taxed. Two regimes coexist: the micro-foncier (flat 30% allowance if annual income does not exceed €15,000) and the real regime (deduction of actual costs and possibility of creating a property income deficit). The choice of regime directly affects the net yield of the investment and shapes the broker's advice.
Key points
- The micro-foncier regime applies automatically when gross annual rents stay below €15,000.
- The real regime allows deduction of repairs, loan interest, management fees, and insurance.
- A property income deficit under the real regime can offset total income up to €10,700 per year.
- The chosen regime locks in for three years; early analysis with a broker is advisable.
Frequently asked questions
How do you choose between the micro-foncier and the real regime?
If your actual costs exceed 30% of rents received, particularly with major works or a recent loan, the real regime is almost always more beneficial. Below that threshold, the simplicity of the micro-foncier wins. A broker or tax adviser can model both options for your specific situation.
Why do property rental incomes matter to a mortgage broker?
Banks factor rental income into borrowing capacity calculations, but typically apply a 30% haircut to account for vacancy and costs. The broker must present the chosen tax regime and net income figures to optimise the client's debt ratio.
What is the difference between foncier income and BIC income in rental property?
Property rental income (foncier) covers unfurnished lets; furnished lettings fall under the BIC category with its own allowances (micro-BIC, 50%) and depreciation rules. Switching category significantly changes the tax profile and how the bank file looks.
In practice
A landlord receives €12,000 in annual rents and incurs €4,500 in actual costs. Under micro-foncier they declare €8,400 taxable income; under the real regime only €7,500, a meaningful saving depending on their marginal tax bracket.
Official sources
- Declaring rents from an empty dwelling · impots.gouv.fr
- Housing and financing information · ANIL
- Mortgage credit (official guide) · Service-Public.gouv.fr