How does the 30% allowance for rental income in France really work?

Reader Question: I understand there is a rule on a 30% allowance against rental income. Does this apply everywhere?

There are two situations where there is a rule on a 30% allowance, and these both apply only if you declare according to the simplified micro taxation systems.

The alternative to these is declaring under the réel (real expenses) systems, which involve more complex forms and accounting.

Read more: Are French tax charges on foreign property rental income correct?

Firstly, there is a longstanding rule called the micro-foncier, which provides for a 30% expenses allowance in the case of income from unfurnished rental (location vide) on long-term leases where the income does not exceed €15,000 a year.

Secondly, as of this year, the rules for furnished holiday rentals under the micro-Bic system have largely been aligned with the micro-foncier, unless the rental is ‘classified’ under the star-rating system, in which case there is a 50% allowance within a ceiling of €77,700.

So, in many cases, a 30% allowance also now applies to this holiday rental income.

Micro income from furnished rental on long-term leases benefits from the same rules as ‘classifed’ holiday rentals.

Read more: Understand French tax rules on furnished rentals

As for where these rules apply, they are applied in the same way in all parts of France. Under a former, now abandoned, plan, there would have been different holiday rental income rules depending on whether a property was in an area deemed to be facing housing pressures or not, however that is not currently the case.

With regard to rental incomes from abroad, the micro-foncier is available for foreign income, but not the micro-Bic.

However, double tax treaties come into play as to whether this foreign income is in fact subject to French tax. In the case of rental income from the UK and US, for French residents, this income gives rise to a tax credit against the French tax.