Rental properties France

Rental properties France

Seasonal rental of a French vacation rental house is quite common and mortgage lending French banks are fine with it. Only when a property is overwhelmingly going to be the source of the (only) income in the future do people not want to finance it regularly. Rental income is taxed in France and not in the Netherlands. A tax return on this income must therefore be filed in France.

French banks usually have no problem with seasonal rental of a house purchased with a mortgage based on existing income. What is important is that the property is not too commercial in nature. So existing Chambres d’hotes / Bed & Breakfasts, hotels, or properties with multiple gites or lots of rooms (with separate bathrooms) may lead the bank to conclude that there are plans other than purely private use and occasional seasonal rentals. When banks suspect that prospective clients have plans to “change course” and start or take over a tourism business in France, they conclude that the existing income will end and that the requested mortgage is in fact business financing is.

Purchase of a French house or apartment that is newly built where there is the tax benefit of VAT refund are so-called residence de tourisme properties. Attached to the VAT refund is the obligation of furnished seasonal rental of at least 9 years. In addition, VAT refunds are subject to additional requirements – including a reception desk, linen service and cleaning – in which operation by a rental organization – with which the owner draws up an operating agreement – is indispensable.

The tax treaty between the Netherlands and France provides that France may levy taxes on assets in the form of real estate located in France such as a second residence. As a result, the (net) value of a French house is taxed in France and no longer in the Netherlands (box 3). Rental income is taxed in France and thus should be taxed in France.

Renting out a French house partially financed by a mortgage can be an interesting addition to retirement. When rental income covers the mortgage and other expenses then the house “comes to you” because after full mortgage repayment there remains a mortgage-free home that generates rental income.

There are several rental platforms for second homes. These platforms offer services of varying degrees. From rental mediation only (via a booking module) to complete outsourcing of the rental including local handling.