Actual-expense regime (rental income)
The actual-expense regime for rental income allows a bare-ownership landlord to deduct all real costs — loan interest, repair works, insurance, management fees — from gross rents. It is mandatory above €15,000 in annual rental income and can be elected below that threshold when actual expenses exceed the 30% flat allowance of the micro-foncier regime.
Key points
- Deductible charges: loan interest, repair works, property tax, insurance, management fees.
- Rental deficit offsettable against total income up to €10,700 per year (excluding interest).
- Deficit portion attributable to interest can only be carried forward against rental income for the next 10 years.
- Once elected, the option is binding for a minimum of 3 years.
- Reported on tax form n° 2044 (or 2044-SPE for special schemes).
Frequently asked questions
When is the actual-expense regime preferable to micro-foncier?
The actual-expense regime becomes advantageous as soon as deductible expenses exceed 30% of gross rents — typically when a recent mortgage carries high interest charges or major renovation works are underway. A quick comparison of net taxable income under both regimes helps the broker guide the client.
What happens to a rental deficit when overall income is insufficient to absorb it?
The portion of the deficit exceeding available overall income can be carried forward against total income for the following 6 years. The interest-related portion, however, can only be carried forward against future rental income for up to 10 years.
Why does electing the actual-expense regime lock the taxpayer in for 3 years?
The minimum three-year lock-in prevents opportunistic switching between regimes based on year-to-year cost fluctuations. It pushes the investor to plan ahead and align the financing plan with projected renovation schedules and loan repayments.
In practice
Thomas receives €14,000 in annual rent from a mortgaged apartment. His loan interest (€4,200), property tax (€900), and co-ownership charges (€1,100) total €6,200, or 44% of rents. By electing the actual-expense regime, he reduces his taxable rental income to €7,800 instead of being taxed on €9,800 under micro-foncier.
Official sources
- Declaring rents from an empty dwelling · impots.gouv.fr
- Housing and financing information · ANIL
- Mortgage credit (official guide) · Service-Public.gouv.fr