Q&A: Ask the ex­perts

Our ex­perts give their ad­vice on in­come tax, can­celling home in­sur­ance and re­fund­ing tax agents’ fees

Living France - - Contents - KEHINDE DAUDA

ABe­cause the prop­erty is in France, the rental in­come is sub­ject to French in­come tax, so you will have to de­clare the in­come in France. As UK res­i­dents, you also need to de­clare the in­come on your UK tax re­turn.

Non-French res­i­dents are nor­mally sub­ject to a min­i­mum 20% rate on the tax­able in­come. In ad­di­tion to this, the tax­able rental in­come will be sub­ject to so­cial charges which cur­rently to­tal 15.5%, although Pres­i­dent Macron has pro­posed in­creas­ing it by 1.7%.

To avoid be­ing taxed twice, the tax is el­i­gi­ble for dou­ble tax re­lief in the UK, but not the so­cial charges be­cause they are not con­sid­ered to be ‘tax’ by the UK au­thor­i­ties.

The French tax year is the same as the cal­en­dar year and the dead­line for sub­mit­ting the re­turn is nor­mally May or June of the fol­low­ing year. For 2016 in­come, the dead­line was 17 May 2017 for non-French res­i­dents. If the rent from the hol­i­day let is your only French in­come and it is not a one-off (so you will be let­ting it out each year), then it will be taxed as fur­nished let­tings in­come. You will need to com­plete two forms: Form 2042 – Main tax re­turn, and Form 2042 C PRO – Sup­ple­men­tary re­turn, to de­clare the fur­nished let­tings in­come. As the in­come is be­low a cer­tain thresh­old (€33,200), by de­fault, a sim­pli­fied method of tax­a­tion ap­plies whereby you de­clare only the gross rental in­come; your ex­penses are au­to­mat­i­cally deemed to be 50% of the gross rent (or a higher per­cent­age of 71% if it qual­i­fies as a meublé de tourisme or cham­bres d’hôtes). Un­der this sim­pli­fied regime, you do not have to take ac­count of your ac­tual ex­pen­di­ture.

It is pos­si­ble to opt out of the de­fault sim­pli­fied tax regime and in­stead de­ter­mine your tax­able profit (or loss) based on your true ex­pen­di­ture. This may be ben­e­fi­cial if the ac­tual ex­pen­di­ture is more than the deemed 50% of gross in­come, how­ever it will in­volve more pa­per­work as you will have to reg­is­ter the rental busi­ness, keep proper records of in­come and ex­pen­di­ture and pre­pare ac­counts. Nor­mally you would use an ac­coun­tant for this. You will need to weigh up the ad­di­tional costs against any tax sav­ings.

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