Furnished rental in rural gîtes or gîte de France, a new taxation

In France, the gîtes ruraux sector is taking on a new fiscal look. The flat tax rate of 29% has been exchanged for the common law regime which deducts up to 50% of the rental income. The fiscal gifts concerning the property tax, the housing tax or the CFE are suppressed, except for furnished tourist accommodation.

What is a rental in a rural lodging ?

The rental in rural lodging is a form of leisure accommodation which concretizes the renewal of the French tourist offer. No decree expresses a conventional definition of the gîte rural, however it is considered that it is a rental of a house or apartment of temporary duration, which is imperatively in a rural environment. The owner is usually a farmer or a farm household who rents out his property for a maximum period of six months, the property having to be available over the 90 days of the year.

Taxation of rental income has changed

Prior to the proclamation of this decree, furnished rentals in rural lodgings enjoyed a light taxation, in the sense that a significant tax exemption was practiced for them. But apparently, the tax authorities have stopped being lenient. As of 2016, it has dissociated the tax regime for rural lodges, introducing the criterion of classification as a "furnished tourist accommodation" as a condition for access to the flat-rate abatement of 71%. This is a major reform in the sector of rural lodgings: if previously, the gross receipts from the rental use of the building were only taxed at 29%, the tax rate will now rise to 50%. The administration has therefore decided to apply the common law regime to rural lodgings, as for all furnished residential properties. The 71% favorable abatement rate is valid only for establishments classified as furnished tourist accommodation. It should be noted that the classification as a furnished tourist accommodation is issued by an accreditation body, after an inspection of the premises.

There are no more exemptions for housing taxes, property taxes and the business property tax

The innovation affects other tax obligations. The Finance Act voted to eliminate the preferential benefits provided for rural lodgings in rural revitalization zones, which were previously exempt from housing taxes and taxes on built properties. From now on, they will have to pay them in full. These were the provisions of Article 91 of the Finance Act, which will come into force from 01 January 2017.  Only the rural lodgings receiving the qualification "furnished tourism" will not lose their privileges. And to make the cup overflow, the State has removed the exemption that concerns the property tax of companies.
Gîte de France in the north of France : vacation rentals
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