You have decided to let your house during the holidays? In order to help you with your project, here are some key elements to consider before putting your property up for seasonal rental?
Before letting: a few points to check off beforehand
Does your property respect the regulations regarding a furnished holiday rental?
A furnished holiday rental is defined as “the renting out of a local furnished property for housing used repetitively by customers that do not establish residency in it”. Source the ALUR law
The first thing to do is to verify that your house or flat have meets the conditions need to be qualified as furnished.
For that, the property must have:
- Gas cooker or heating plates
- A refrigerator
- Kitchen utilities
Furthermore, your house or apartment must respect the minimum requirements to be classified as decent housing fixed on the 30th of January 2002 in the decree n°2002-120.
Different cases depending on the length of the rental
If you are an owner and you wish to put your property up for rental for less than 4 months you are not subject to any specific regulation and you can freely let your property for less than 4 months a year. You are, though, required to ask for your registration at INSEE’s directory “Sirène”.
You are also obligated to pay property, housing, collect the visitor’s tax and your tax returns.
If you let for more than 4 months, you must respect the furnished holiday property regulations.
In a building, check your commonhold rules:
Before letting your property, you must verify with your commonhold rules that it is not banned. Indeed, you might be the owner of your real estate asset but a clause can ban the possibility for seasonal rentals. This can be the case in high-class buildings where even professionals cannot work (including liberal professions).
Moreover, even if professionals are authorized to work in the building by the rules, it is advised to ask the property management whether a ban exists or not.
If you are a tenant and you wish to sublet your flat, you must receive the owner’s authorization. If it is not included in the lease agreement, the national Institution of Consumption offers a template of the written authorization you need the owner to sign.
Please note that the subletting of social housing is prohibited and you can be evicted if found guilty.
Prevention against risks
Can your property be a potential danger for people that are not aware of the danger? You should repair unprotected wires, make sure the pool is up to date with the latest regulations, clean the chimney, clearly state the places where people could fall and hurt themselves or even places where children could be at risk.
Seasonal rentals do no need to have EPCs (energy performance diagnostic).
Inform your insurance
We encourage you, before offering your property for rentals, to inform your insurer that you wish to let your house or apartment. Simply check that the civil liability covers also tenants. This guarantee is useful if physical injuries occur. Ask for advice from your insurer who will provide further information.
Note that in the eventuality of a burglary and/or loss of personal belongings, you will not be responsible.
Your obligations as a seasonal lessor:
As a seasonal lessor, you must know the national regulation but also potential municipal decree regarding tourism.
Town hall registration
Owners of a furnished holiday property who wish to let their house or flat for more than 4 months a year are required to inform the local municipality with the CERFA n°140004*02 form. You can ask the professional managing your rentals to do the paperwork.
Furthermore, most municipalities ask holiday-makers to pay for a visitor’s tax. You will be required to collect it and transfer it onto the town. The collection can also be done by the professional managing your rentals or the website dealing with your reservations.
For properties’ in Paris and the surrounding towns or cities with more than 200,000 inhabitants, owners must do the same registration but also ask for their primary residence to become a furnished holiday rental. This is therefore not the case in the Basque country or the Landes.
INSEE’s Sirène directory registration
Since the start of 2017, all lessors must declare the beginning of their rentals. Registering is free and is done with the P0i form (http://www.service-public.fr/particuliers/vosdroits/F2043) the property’s local court of commerce.
You will be allocated a SIRET number by INSEE.
Incomes provided by seasonal rentals, whilst being a non-professional lessor, are subject to income tax according to a gradual scale. They must be declared as Commercial and industrial benefits (BIC) in the “location meublée non professionnelle” space. You will benefit from a 50% allowance but you can also choose to Real benefits plan.
A useful brochure “Non-professional lessors’ of furnished properties” regarding taxation will help you discover the ins and outs.
If you use an Internet platform to rent out your property, please note it must provide you, at the start of year, the history of the gross transactions for the past year you have performed through it. This obligation is mandatory for all reservation made after the 1st July 2016.
If you let a part of your primary residence, the income can be exonerated of all taxation is the price of the rental is with reasonable limits and that your yearly income does not exceed 760€. The reasonable rental price limits are determined every year by the fiscal authority. In 2016, they were capped at 135€/liveable m2 in south western France.
If your rental income exceed 23,000€ a year, you will also be required to register to the scheme for self-employed workers (RSI) and you can be considered as a professional lessor.
As an owner you are obliged to make sure that your property has the minimum safety requirements. The following are an overview of the mandatory measures:
A smoke detector installed
A number of windows located in higher levels must be have a guard installed
Bunk beds must have safety barriers
The pool must respect the safety regulations in place
Letting as a professional:
Note that you will be required to have the Professional status if you tick off these three conditions:
Your revenue provided by your seasonal letting exceeds 23.000€/year,
At least one member of the taxable household is registered in the commerce and company directory,
The revenue provided by your seasonal rental activity exceeds the taxable household’s revenue.
Obtaining a property ranking: an advantage
Being awarded a rank for your holiday rental property will give you opportunity to promote your property’s comfort and the quality of the services you offer. It is not at all required but as one of our clients pointed out, the main advantage, when ranking your property, is the tax benefits. Indeed a ranked property will have a tax deduction of 71% instead of 50% for non-ranked properties.
The advantages of a ranking property
It should be noted that the advantages are not only tax related; having your property ranked has other appreciated advantages:
It becomes a selling point for your property: this ranking has an international notoriety; it bears witness of the quality of your offering for future clients.
The ranking opens up the possibility to ask for financial aids to subsidise your tourism accommodation or renovation projects.
The ranking can protect you against possible legal actions because an inspection of the facilities and service will have been performed.
Your rental offers will automatically be found on tourist offices’ websites
A small additional perk is that you will be able to accept holiday vouchers payments.
The ranking of seasonal rentals
Also called furnished properties suitable for short term lets, is calculated in function of the comfort and the benefits provided by the house or flat.
Furnished properties suitable for short term lets are houses or flats that are rented out for a day, a week or a month to people passing by the region. They must be holiday destination and not a place of residence.
The ranking goes from 1 up to 5 stars and is valid for 5 years. The cost of the procedure is more or less 150€ but it ultimately depends of the type of properties and its surface area. The number of stars awarded depends of 3 main categories.
Holiday letting: your obligations
All furnished holiday rental properties, ranked or not, are subject to visitors’ tax. This tax funds the services and the facilities that encourage tourism in your town. It is based on to the number of nights and individuals. Municipalities are very strict with these since the increase in number of Internet rental platforms. You must collect it from your clients and transfer it onto your local town hall. You can ask for the professional managing your lettings to deal with it.
The amount varies from 0.20€ to 3€ and must be posted in the property up for rental.
The tax amount and the period of validity are determined by the municipal council or the EPCI (Public organisation of inter-municipal cooperations).
The municipal council also decides of the type of visitors’ tax to put into place: real or bundle.
The real tax: is calculated on the number of nights spent. Minors (less than 18years of age), seasonal workers, people benefiting from temporary rehousing and individual that pay a rent below the municipal fixed rate.
The visitors’ tax must be written down on the invoice.
The visitors’ tax is not taken into account when calculating the VAT’s base and must be declared within the timeframe specified by the municipality or EPCI.
The bundle tax: this tax is calculated on the total capacity of the property, the number of days you offer rentals and the touristic period during which the tax is collected.
The tax can impact the price of the rental (visible on the invoice). The visitors’ tax is not taken into account when calculating the VAT’s base because it is integrated into the price scheme.
At least a month before the visitors’ tax period starts you must inform the town of the above stated information. The tax is thus transferred in the timeframe specified by the municipal council.
Any fraudulent declaration, delay or absence is severely punished and con be fined up to 1500€…
Housing tax or Businesses’ Real Estate Contribution (CFE):
If your furnished holiday rental property is your personal place of residency you will only be subject to the housing tax, and if on the contrary it is not you will only be subject to the CFE.
A personal place of residency must be understood as a property in which you live in when it is not rented out. It can be your primary residency or your secondary one.