Foreign rental income: do I declare gross or net?
This depends on whether the property is rented furnished or unfurnished
I am now a tax resident in France but continue to own a property in the UK. I declare the rent for this to HMRC, but for the first time I will also have to declare it in France. Should I declare the gross amount of rent received or the amount with the UK’s tax-free allowance deducted?
How you declare it depends on whether the property is rented furnished or unfurnished, and whether you opt for the micro or réel tax regime.
Micro regime: This is a simplified system with fixed expense allowances. You declare the gross income (before any UK tax-free allowance), as the French tax office applies its own fixed deduction for expenses.
Réel regime: This requires keeping full records and receipts. You can deduct actual expenses related to the rental activity.
Assuming the property is unfurnished:
If the income is under €15,000 a year, you can opt for micro-foncier.
If over €15,000, the réel system is obligatory.
If the rental is furnished, it is treated as BIC (commercial) income, and the declaration is generally done under the réel system.
This income is taxable in the UK, but declaring it correctly in France allows you to claim a tax credit equivalent to the French tax assessed on it. However, it is still taken into account for calculating your French tax rate, which can push other French-taxable income into higher bands. This prevents benefiting from tax allowances in both countries simultaneously.