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Cut tax perks for short-term tourism rentals, French government told
A new report recommends making it less financially attractive for property owners to pursue short-term tourism rentals
Short-term tourism rentals in France - such as those on Airbnb and Abritel - could soon lose their tax advantages, if the government follows the recommendations of a new study.
The report is a response to the issue of short-term rentals in popular French tourist hotspots, which have been blamed for contributing to soaring property prices and empty homes. Pays-Basque, Brittany, Corsica and other coastal areas are among the regions most impacted.
“In tourist areas, property prices are high and rising faster than elsewhere, with pressure to access housing in both social housing and private housing,” read a press release accompanying the report.
“For resident incomes barely higher than the national average, the combination of a high effort rate and a scarce supply thus leads some, including first-time buyers, to have to look away from the coast and into the valley bottom to find their main residence.
“These imbalances result in particular from the development of second homes and the explosion of short-term tourist rentals via digital intermediation and transaction platforms.”
The study, jointly commissioned by three French government ministries, proposed three solutions to tackle the issue.
1. Remove financial advantages for short-term tourism rentals
The report recommends aligning the maximum taxable income to benefit from the advantageous micro-BIC tax regime.
Currently, that is €72,600 a year for traditional, longer-term furnished rentals and €176,200 for short-term tourism ones.
The report said the ceiling for short-term tourism rentals “appears excessively high”.
These limits would apply only to the most densely populated areas.
2. Limiting the tax allowances
Also among the recommendations is limiting tax allowances for landlords with short-term tourist accommodation to 50%, as opposed to the 71% currently allowed. This would make it the same as for longer-term furnished rentals.
The report said: “The additional tax allowance…granted to furnished tourist accommodation…no longer appears justified.”
3. Making the tax regime the same
The report also advocates making the tax regime for furnished rentals the same as that for unfurnished rentals. The idea would be to limit tax deductions from le régime réel - which is used by those who want to deduct their exact expenses - and the simpler micro-BIC alternative. This would eliminate - for furnished rentals - the possibility of landlords being able to deduct loan interest from their rental income.
The government launched a national consultation on short-term property rentals in November last year, involving ministers and local associations professionals.
In a statement to Capital, France’s housing ministry said: “A total of 73 proposals and contributions were presented by the various stakeholders. They are in addition to the proposals from the report published on March 13.”
The government has now promised to study these proposals “in the coming weeks” and to publish a summary by the summer of 2023.
A bill of possible steps forward could be presented if the government decides to go ahead with some or all of the recommendations. However, a date for this is still yet to be decided.
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