Whether you want to get into real estate, buy a house or apartment to rent to individuals, or you are planning to renovate an old family home to rent it through a real estate agency, you will need to take enough time to learn about the various tax rules relating to rental income. Indeed, the rental of real estate is governed in many ways by a precise legislative framework that governs all owners and their tenants’ relations.

Rental income, the collection of your rents

Rental income, or property income, is the amount of money that is collected during a calendar year as part of the lease of any unfurnished real estate property. So it is also about the rental by a lessor (professional or independent) of an apartment, a house, a garage, a parking space or professional premises like offices, without forgetting land rentals. Since they are regulated under the law, they must be declared by the owners each year. Apart from the simple affixing on your tax return form sums collected monthly for the rental of housing, it is up to you, the owners, to identify the conditions inherent in your rental. Rental income is essentially composed of the collection of rents during a calendar year.

Land deficit and land profit

It is a question of being able to take into account its result land, to be able to establish for an owner if it is in deficit land or on the contrary in property profit.

Land profit

This is a situation in which the amount of different rents is greater than the amount of expenses incurred by an owner. Note that, in general, the owners are in a situation of property profit.

Land deficit

This is a situation in which the amount of rent collected is lower than the various expenses incurred. The land deficit is often observed when a homeowner has just purchased a home and borrowing interest must be taken into consideration. In the case of a deficit, we can then refer to a tax deduction, specific to a plan and subject to a specific ceiling.

How to declare your rental income?

To be able to declare your different rental incomes each year, you will have to refer to your plan, the flat rate plan or the actual plan. There are two different regulations that all lessors must meet:

– The flat rate applies to people whose property income is less than or equal to 15,000 Euros collected in one year, resulting in a flat-rate reduction of 30%.

– The real regime is applied when rental income exceeds € 15,000 collected annually. Then you have to deduct the various expenses such as the amount of the work, the loan interest, the condominium fees as well as the insurance premiums.