Tax Break on Furnished Lodgings to be Ended
Wednesday 07 November 2018
A tax break available to owners who let out a room to a lodger in their property may be abolished in 2019.
Those who let out furnished rooms in their own home in France are exempt from income tax, social security contributions and business rates on the income, a concession that is subject to two conditions:
- That the accommodation constitutes the principal home of the tenant and of the owner and;
- That the annual rental does not exceed a maximum 'reasonable' figure.
For 2018 the maximum figure is €185m2 per year in the Ile-de-France and €136m2 per year elsewhere.
The tax break dates back to 1983, when it was established to attract tourism, mainly through the development of chambres d’hotes and in different economic circumstances.
During the passage of the finance bill currently proceeding through the French parliament an amendment to the bill was introduced by the ‘rapporteur’ to the finance committee, proposing that the benefit be abolished.
The rapporteur argued that there was no evidence that the measure had been effective, and that it should be abolished, a view that was accepted on a majority vote.
However, the finance bill has yet to complete its passage through the parliamentary process, and the position may well yet change.
POSTCRIPT: In the end the government backed off from this measure, so the tax break remains in place.