Renting out your home for income in France

How to rent your property in France when you are abroad?

When wanting to rent our your property, one of the most favorable choices for expatriates is to have a reliable individual present on-site. This option provides greater peace of mind, often at a lower cost, and enables you to maintain control over every aspect of leasing your property.

Enlisting the support of friends, family, or other trusted acquaintances significantly reduces the expenses typically associated with professional rental management services. This approach becomes particularly important when considering long-term property rentals in France, as tenants are afforded significant legal protections. Therefore, conducting a thorough and diligent assessment of potential tenants before finalising any rental agreements becomes crucial. 
Moreover, landlords are bound to provide tenants with specific survey reports, similar to those required during property sales. It is important to approach the process of renting out your property for income with attention to detail.

While this option may seem ideal, its implementation can be complex. Not all expatriates can expect such commitments from their loved ones. Managing real estate demands considerable time, expertise, and patience. 

Alternatively, you may opt to engage a rental property management agency to handle the property during your absence. Although this option incurs higher costs, it ensures professional supervision of the accommodation.
By reaching out to real estate agents, you can receive guidance on the sometimes lengthy and intricate administrative procedures in France. This option proves especially valuable if you reside far away from the property, as the agency can handle tasks such as property inventory, verifying that everything is in order, key handover, and overall property management.

Renting your property out short term through online platforms is a viable option, especially if your property is located in a busy or highly touristic area. It offers the opportunity to generate significant income while still retaining the flexibility to access the property according to your own schedule
The law for a digital republic, or "Loi pour une République Numérique": This 2016 law established particular guidelines for short-term rentals in France. The local municipality must give authorisation before homeowners can rent out their principal residence for brief periods (less than 120 days annually in some places). This law aims to protect he local housing market, with too many residences being rented out for short-term stays.  
It's crucial for hosts to become informed with the local laws and regulations and make sure they comply to all legal requirements. In order to better understand the regulations and obtain any required authorisations or permits, don't hesitate to consult local officials, such as the municipality or tourism office.

Essential French regulations to consider when renting out your property

The tenant takes on several key responsibilities, including the  payment of service fees and rent on time, as well as obtaining house insurance. As a landlord, you have certain obligations to fulfill when renting out your property. It's important to understand that your tenants rely on you for a safe and comfortable and living space.

First and foremost, your primary duty is to provide “décent” housing that meets all the health and safety standards required by your tenants. This means ensuring that your property is in good condition and complies with relevant regulations. Take note of the following requirements:

• The main room should have a minimum living area of 9 m² and a ceiling height exceeding 2.20 m.
• The property must not pose any safety or health hazards to the tenant.
• It should be free from infestations or pests.
• The property should demonstrate acceptable energy performance.
• Essential amenities, including a reliable drinking water supply system, electricity grid, and a functioning kitchen, should be provided.

Remember, it's the landlord’s ongoing responsibility to meet these requirements. Neglecting essential repairs or failing to meet your, might lead tenants to withhold rent or even take legal action.

Differences between Furnished and Unfurnished renting in France

When it comes to renting out your real estate, such as a studio, apartment, or villa, you need to decide whether to offer it as an unfurnished rental or a furnished rental.
These two leasing options have long governed the relationship between tenants and landlords. Before proceeding with renting your property, it's crucial to examine the rental demand in the specific geographical area. Based on the information you gather, you can make an informed decision whether to opt for an unfurnished or furnished rental agreement. It's worth noting that your choice of lease will impact the taxation of your rental income, your responsibilities towards tenants, and rental regulations. Each type of rental (furnished and unfurnished) has its advantages and disadvantages : 

Furnished rentals 

To qualify as a furnished rental, the property must include a minimum set of elements, such as bedding with a duvet or curtain cover, shutters or curtains in the rooms, an oven or microwave oven, a refrigerator, and cooking utensils. You can find the complete list of requirements on the official website of the French government.

It's important to note that the rent for a furnished unit is typically higher compared to an unfurnished one. This is because of the additional investment involved in purchasing furniture and equipment. However, the higher rent can be offset by more favorable tax conditions, and rental incomes are generally 5% to 30% higher compared to unfurnished rentals.

In terms of the rental contract, for a furnished rental, the minimum duration is typically one year, with the exception of student leases which have a minimum duration of nine months. Additionally, landlords may require a security deposit of up to two months' rent. If you anticipate the possibility of needing the accommodation for personal use or selling it in the future, opting for a furnished rental is advantageous. This is because you would only need to wait for one year until the end of the rental contract before reclaiming the property.

Unfurnished rentals

With unfurnished rentals, landlords experience fewer responsibilities and hassles as they are not required to provide or maintain equipment. 
Unfurnished rentals generally come at a lower cost. However, tenants tend to stay for longer durations, reducing the need for active property management as the landlords are not responsible for the upkeep of furniture and appliances. It's important to note that the rental contract commitment for unfurnished rentals is typically a minimum duration of 3 years, which offers less flexibility for owners in terms of property usage.

Opting for an unfurnished rental allows landlords to streamline their involvement and focus on the core aspects of property management. While it may require less immediate attention, it's essential to consider the long-term commitment and limited flexibility that comes with this type of rental agreement.

Taxation

When it comes to taxes, it's important to know that even if you're a non-resident, you'll still need to file a tax return with the French authorities for your rental income in France, as well as any other income sourced from the country.

This is a common practice in most countries, where rental income is taxable in the country where the property is located. You'll also need to report this income to the tax authorities in your home country. The good news is that France has double taxation agreements with many countries, which means you're unlikely to be taxed twice on the same income in most cases. As a property owner, you may also have other tax obligations, such as property tax, housing tax.

It's important to understand the key differences between furnished and unfurnished leases, particularly when it comes to taxation. In unfurnished leases, the rents collected are considered as land income. On the other hand, in furnished rentals, rental receipts are classified as commercial profits (BIC). For both types of leases, you have the option to choose between two tax systems: the “micro foncier” (for unfurnished properties) or “micro-BIC” (for furnished properties) systems, or you can opt for the "Réel" system.

Let's take a closer look at the tax regimes, starting with the micro-BIC regime for furnished rentals and the micro-foncier regime for unfurnished rentals. Under the micro-BIC regime, you can enjoy a 50% deduction on your rental income for furnished accommodations. On the other hand, the micro-foncier regime allows for a 30% deduction for unfurnished rentals. This means that the government will only tax you on 50% of your furnished rental income and 30% of your unfurnished rental income.
To qualify for the micro regime, you must not exceed certain rental income thresholds. For unfurnished rentals, the threshold is €15,000, and for furnished rentals, it is €77,700.

If your rental income exceeds these thresholds, you will fall under the "réel" system. With this system, your rental income is combined with your other income and taxed according to the progressive income tax schedule. However, the advantage of the "réel" system is that you can deduct your actual expenses, such as loan interest, repair costs, and property management fees.

It's important to keep in mind that tax rules can vary based on your personal circumstances and the specific nature of your real estate investment. 
To navigate the complexities of rental income taxation, it's advisable to seek guidance from a tax professional or accountant who can provide personalized advice based on your specific circumstances. They will help you make informed decisions and select the most suitable tax system for your rental income in France.

To learn more about taxation in France, feel free to check out our “Taxes in France: Understanding the system as an expat” guide ! 

Insurance

As a landlord in France, it's crucial to secure appropriate insurance for your rental property. If you have an unfurnished property, you can opt for "unoccupied insurance," which is generally more affordable than a standard household policy. However, for furnished properties, you must ensure that the insurance coverage includes the value of fixtures and furnishings.

Insurance requirements may vary depending on your specific situation and the nature of your rental. One essential insurance to consider is the "Garantie Loyers Impayés" (GLI), or Unpaid Rent Guarantee. GLI is a private insurance that safeguards landlords against potential rent defaults by tenants. This type of insurance can also cover eviction procedures, providing added protection and peace of mind.

In addition to GLI, it's advisable to explore other insurance options for comprehensive coverage. Property Risk Insurance is a common choice, as it offers protection against property damage caused by events such as fire, water damage, or natural disasters. It may also include civil liability coverage to protect against potential damages to tenants or third parties.

Lastly, Legal Protection Insurance can prove invaluable, covering legal expenses in the event of rental disputes, such as lease disagreements or conflicts with tenants.