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VAT in tourist and business residences (nouvel article)

Furnished lettings are generally exempt from VAT. They become subject to VAT when the property is let to an operator providing hotel-type services, which is the case for most tourist and business residences under a commercial lease. Your lease and purchase deed state your position.

If you are liable for VAT

  1. Your rent is invoiced to the operator with VAT (usually 10%).
  2. You were able to recover the VAT paid on the purchase price.
  3. You also recover VAT on certain expenses: service charges invoiced with VAT, works, professional fees.
  4. Your VAT returns (usually one annual return and two instalments) are prepared and filed through our platform, included in your mandate, or by CRISTALIS if it keeps your accounts.

What can trigger a repayment. The VAT recovered on purchase is only fully secured if the property remains let with VAT for 20 years. If this stops earlier (commercial lease ending without a new operator, letting without services, sale to a buyer who does not continue the lease), part of the VAT must be repaid, in proportion to the remaining years. Please contact us before making any such decision.

Each year, after your tax return has been filed, Celavigestion sends you a summary document. It shows the amounts to report on your income tax return, in the supplementary form 2042-C-PRO (non-professional furnished rentals section), between late April and early June.

This document is based only on the information in your file. It does not take into account:

  1. each owner's share, if the property is jointly owned;
  2. your other furnished rental properties managed in separate files.

In these cases, split or add up the amounts yourself before reporting them.

Filing online

  1. In your personal account on impots.gouv.fr, open the online return.
  2. At step 2, check or complete your personal details.
  3. At step 3, tick "Revenus des locations meublées non professionnelles" (non-professional furnished rental income). If our document mentions a tax reduction (for example Censi-Bouvard), also tick "Réductions et crédits d'impôt" (tax reductions and credits).
  4. Enter the amounts from our document in the boxes it shows: usually 5NA for a profit or 5NY for a loss (real regime), and previous years' losses not yet deducted in boxes 5GA to 5GJ.
  5. Enter the address of the rental property. If you are asked for a business name, enter your full name.

https://drive.google.com/file/d/1FLiYUS24yb-H78qktAcD1cJuboZzHWh3/view?usp=sharing

Paper return (2042-C-PRO)

  1. On page 1, identify yourself: name, address of your French property as the business address, SIRET number, and tick "BIC".
  2. In the "Revenus des locations meublées non professionnelles" section, fill in the "Régime du bénéfice réel" box with the amounts from our document.
  3. Date and sign.

https://drive.google.com/file/d/1k87C3y2IwPRh4nm9Gm8fC8t0FtI3slC2/view?usp=sharing

Box numbers may change from year to year: always follow the ones in our document.

Living abroad? See article 2.7.

C'est l'intérêt du régime réel : vos loyers sont diminués de vos charges et de l'amortissement de votre bien.

  1. Les charges (intérêts d'emprunt, taxe foncière, assurance, charges de copropriété, honoraires) sont déduites en premier. Si elles dépassent vos loyers, vous êtes en déficit.
  2. Ce déficit ne s'impute pas sur vos salaires ou vos autres revenus. Il se reporte sur vos revenus de location meublée des 10 années suivantes.
  3. L'amortissement du bien (hors terrain) et du mobilier vient ensuite réduire le résultat jusqu'à zéro, sans jamais créer de déficit. La part non utilisée se reporte sans limite de durée.

Un résultat nul pendant de nombreuses années est donc normal. Attention toutefois : les amortissements déduits peuvent augmenter la plus-value en cas de revente (voir l'article 6.3).

This is the advantage of the real regime: your rent is reduced by your expenses and by the depreciation of your property.

  1. Expenses (loan interest, property tax, insurance, service charges, fees) are deducted first. If they exceed your rent, you make a loss.
  2. This loss cannot be offset against your salary or other income. It is carried forward against your furnished rental income for the next 10 years.
  3. Depreciation of the property (excluding land) and furniture then reduces the result down to zero, but never creates a loss. Any unused amount is carried forward with no time limit.

A zero result for many years is therefore normal. Note, however, that the depreciation deducted may increase your capital gain if you sell (see article 6.3).