How your Ile de Re holiday rental income is taxed?

Before investing in a holiday rental property on the Ile de Re, it is a very good idea to factor income taxation into your Return On Investment calculation. In France, there is a lot to say on the subject!!
We haven’t addressed corporate taxation in this summary, ie when the rental activity is carried out via a company such as an SARL.
This article only aims to give you a general overview of the tax law as it stands at the time of writing.

Income tax


As an individual taxpayer, all the income from your holiday rentals is subject to income tax. You are either considered to be a professional renter or a non professional renter.
The professional renter benefits from a number of tax breaks with regard to capital gains tax and wealth tax. However, it isn’t that easy to be considered a professional renter. Three conditions have to be met simultaneously:

– the annual revenue from this activity by all members of the tax household exceeds €23,000;
– the receipts exceed the income of the tax household subject to income tax in the categories of salaries and wages within the meaning of article 79 of the CGI (including pensions and life annuities as well as the income of managers and partners mentioned in article 62 of the CGI), industrial and commercial profits other than those derived from the furnished rental activity, agricultural profits and non commercial profits.
– The professional or non-professional nature of the furnished rental is assessed at the level of the tax household and applies to all the furnished rentals of the tax household

Even if is fairly easy to exceed gross rents of 23 000 € each year (especially on the Ile de Ré), it is hard for those who are still working to meet the secod condition. If you don’t meet all three conditions at once, you are automatically considered to be a non professional renter.

Whether you are a professional or non professional renter, the income from your holiday let must be declared on your income tax return as income from a trade or business. While income from unfurnished rentals is taxable as ordinary rental income, income from a furnished let is considered to arise from a trade or business. The income is taxed on a fixed basis (“micro BIC”) or on the basis of actual expenses incurred (“regime reel”).

If your gross rents for the year do not exceed 72 600 €  (2020 limit), you can be taxed according to the fixed « micro » regime. In this case, instead of deducting your actual expenses, you are granted a 50% for standard furnished premises ion deduction to cover those expenses. As a result, you are taxed on 50% o of your gross rental income. There are several advantages to the “micro” system:

  • It’s very simple – you declare your gross income and that’s it! The administration takes care of applying the 50% deduction,
  • If your actual expenses are low, the « micro » system allows you to be taxed on a lower amount,
  • You don’t have to fulfil any particular accounting requirements apart from a list of your income by date and amount to be kept in case of audit.

If your income exceeds the 72 600 € annual threshold , you are taxed on your actual income less actual expenses. Similarly, if your actual expenses are higher than 50%  of your rental income, it may be in your interest to opt out of the “micro” system. Project your income and expenses over a few years to see which regime is better for you in the long run.

You may have heard of different limits and deductions applying in the « micro » system for furnished rental income. Indeed, if your rental property has been categorized as a furnished tourist let (“meublé de tourisme”) after applying for this status at the prefecture, or if it can be considered a country gite (“gîte rural”) as a result of a different procedure, as long as your gross rental income from these properties doesn’t exceed 176 200 €, you are granted a deduction of 71% (instead of 50%) which is deemed to cover your expenses. This regime is very favourable, especially if you no longer have interest income to deduct and low other expenses, but it requires you taking the necessary steps with the préfecture and other organisations.

If your annual furnished rental income exceeds 72 600 € (176 200 € in the cases described above), or if your annual income is less than 32 600 € but you don’t wish to be in the « micro » system, you are subject to tax on actual income less actual expenses. This implies a appropriate bookkeeping and the filing of a profits and loss return (form 2033) before the beginning of May with the corporate tax centre for the area in which your property is situated (La Rochelle Ouest for the Ile de Ré). The net income or loss is then carried to your annual tax return.

The main expenses you can deduct are:

  • Setting up costs such as notary fees,
  • Maintenance, improvements and repairs,
  • Local taxes,
  • Management and agency fees,
  • Insurance,
  • Mortgage interest,
  • Wear and tear,
  • Depreciation of the cost of the buildings – the purchase price is not a deductible cost but must be amortized over the useful life of the building, often between 50 and 100 years. Be aware, however, that the actual calculation is more complex than that as each component of the building should be amortized separately based on useful life.

The complexity of this type of calculation means it is probably a good idea to employ a bookkeeper (their cost is a deductible expense) but this implies additional costs for you. It is also important to note that only expenses relating to the period you actually rent the property are deductible. If you rent out your second home for a few weeks each year, you should pro rate your expenses over the time you rent out the property.

Your net rental income, whether you are taxed under the “micro” system or using actual expenses, is added to your other taxable income on your tax return and taxed at progressive rates. As well as completing form 2042, you will also need form 2042C. Gross income taxable under the “micro” system should be put on line 5ND if it is your income and on line 5OD if it is your spouse’s income (page 3 of form 2042C). You should also fill in your and/or your spouse’s name at the top of page 2, along with the address of the rental property and the tax system you are opting for (BIC/micro for the « micro » system or BIC/réel for actual expenses). Net income after deducting actual expenses should be inserted on line 5NK (your income) or line 5OK (spouse’s income).


Non residents are taxable in France on their French source income only. French source income includes income from rental properties located in France. Your net holiday rental income is therefore taxable in France and determined using the same rules as for residents. The tax rate on your French source income cannot be less than 20% unless you can prove that you would have been taxed at a lower effective rate if all your income had been taxed in France. In this case, the lower rate applies.

You have to file a tax return each year and, if necessary, a profits and loss return (form 2033). The tax return filing deadline is slightly later than for residents – end of June instead of the end of May. Form 2033 has the same filing deadline as residents (beginning of May).

It is more than likely that your French rental income will also be taxable in your country of residence. In this case, if there is a tax treaty between France and your country of residence, the treaty will provide a method for avoiding double taxation (either a tax credit or exemption from tax in your home country). As France has a vast network of double taxation treaties, it is very unlikely that your holiday rental income will be taxed twice.

Property tax

The property tax or « taxe foncière » in French is due by the owner of a building on January 1st each year. In the year the property is acquired, the tax is generally split between the buyer and the seller. The amount of tax depends on a variety of factors including the village of the Ile de Re in which the property is located, the size of the property, what sort of facilities it has and the year of construction.

Council tax

The Council Tax or « taxe d’habitation » in French is due by the person who has free use of a habitable property on January 1 each year. If your holiday rental is also your second home, you will be liable for the « taxe d’habitation ». However, if the rental property is purely a rental investment and you never use it personally, you should not be liable for this tax. You will be subject to the « Cotisation foncière de l’entreprise » (CFE) instead by virtue of the commercial character of renting furnished property (this tax partially replaces the former “taxe professionnelle”). It is possible to be subject to both the “taxe d’habitation” and the CFE for the same property in the same year, particularly for a seasonal let. The tax administration sees no problem in apparently taxing the same property twice.

Social contributions

Net rental income is subject to social contributions (CSG, CRDS, « prélèvement social » and additional contributions) which are currently levied at a combined rate of 17.2%. As of the 2012 tax year, non residents are also subject to these social contributions despite being exempt previously. These additional contributions are calculated automatically by the tax administration on the basis of income declared in your tax return without you having to do anything further. You will then receive a separate tax bill for these amounts in October each year.

Tourist tax on the Ile de Re

The tourist tax or « taxe de séjour » in French is due each year to the village of the Ile de Re in which your property is located to help finance the infra structures required for all the tourists.

Regardless of the village in which your holiday rental is located, the tourist tax is paid to the “Communauté des Communes”, the central agency which manages tourism on the Ile de Ré and collects the tourist tax on behalf of the 10 villages on the Ile de Ré.

In 2020, the basis for the calculation of the tax changed. The actual number of nights rented forming the basis for the calculation.

Bon Séjour en France is in charge of collecting the tourist tax from the tenants, then declaring it to the administration and finally paying it on your behalf

Wealth tax

Wealth tax (« impôt de solidarité sur la fortune »): as a non professional renter, the value of your rental property should be included in your taxable base for wealth tax purposes (net wealth over 1 310 000 € on January 1). Non residents are subject to wealth tax in France if the net value of certain French situs assets exceeds the wealth tax threshold of 1 300 000 €. Wealth tax is levied at graduated rates ranging from 0,5% to 1 % for wealth exceeding 800 000 €. Professional renters may benefit from a wealth tax exemption for the value of their rental properties as these are considered to be assets used in a trade or business.

Other formalities

A new formality was introduced a few years ago for holiday renters. You now have to declare the fact that you are renting out your property each year to your local town hall.