Renting Out Rooms in Your Home

Thursday 01 April 2010

Renting out rooms in your home is free from French income tax, social charges and business rates, although not for holiday lettings.

As always, these concessions are accompanied by the usual plethora of small print.

Firstly, the room must be furnished. Although this might seem obvious to most of us, there are different systems of taxation and law for furnished and unfurnished property, so the regulations make this a clear condition of exemption.

Secondly, the room must be the main home of the tenant, so letting out rooms on an occasional basis to visitors and holiday makers would not meet the criteria.

Thirdly, the rooms must be clearly located within the main home of the landlord. So, if you have a gite in the grounds of the property, and let this out, it would not be eligible under these rules.

Finally, the exemption is also subject to the rent being ‘reasonable’, a test that is satisfied by ensuring that it is no higher than the maximum figure set by the regulations each year.

For 2010, the maximum rent outside of the Ile de France is €124 per m², while within the Ile de France it is €173 m².

Accordingly, if you let out a room of 20m², outside of the Ile de France the maximum rent you could charge would be €2480 per year.

In addition to the rent you can also impose a charge for other services, and these charges are freely negotiable. They might, for instance, include a charge for laundry, cleaning, telephone or internet.

Provided these conditions are met, French tax officials have confirmed to us that you do not need to declare the income on your annual French income tax return. As a result, no imposition of social charges or business rates follows.

There are particular arrangements for holiday lettings, which we cannot cover in this article, but which you can read more about in the links below.

This article was featured in our Newsletter dated 01/04/2010