Renting out part of your principal residence: tax exemption requirements

Under certain conditions – notably the setting of a reasonable rent – owners who let a portion of their principal residence as a furnished rental may claim an income tax exemption.

The furnished room offered for rent must be part of the owner’s main home

The rental portion must not be a separate apartment from that of the owner, and no exemption can be claimed for any site which has clearly been converted for separate occupation. Thus, the owner of a property occupied as a first-floor apartment, with two rented rooms comprising a separate apartment on the ground floor, will be denied a tax exemption.
In addition, the furnished rooms available for rent must have been occupied by the owner, or someone from his own family, prior to rental. For example, a landlord owner who rents furnished rooms to students – where these were previously used as store rooms, cannot benefit under the exemption rules.

The furnished accommodation offered for rent must be the principal residence of the tenant, or else the temporary residence of a seasonal worker

A question may arise in the case of students renting accommodation in the city where their study centre is based, but who still wish to designate their family home as their legal residence. A ministerial response indicated that students are deemed to have their main residence in the place where they usually stay during the academic or school year, even where they have designated their parent’s home as their actual legal residence.
Seasonal workers are considered to have their temporary residence in the place where they are staying in order to honour their work contract.

The accommodation rent must be set within reasonable limits

This condition is met if the annual rent per square metre of living space, excluding all services, does not exceed the following ceilings set for 2015 and 2016:

  • € 184 within Île-de-France;
  • € 135 in other regions.

These ceilings are lower than prices charged within the rental market of most large cities – especially Paris – which in practice severely limits most viable opportunities to claim an exemption.
For a room in Paris which is 15 m2, the monthly rent (excluding services and other charges) should not exceed € 230, which is (15 m2 × € 184) / 12 months.

Note however: this exemption can be combined with that allowed on a B & B rental.

If the owner cannot benefit from an exemption, then the rents received will be taxed as business profits.

You liked this post ? Share it !

Leave a Comment

*

*

*Required fields Please validate the required fields

About me

Maud Velter
Maud Velter
Legal & practical advice for furnished rentals
Associate and Legal Director of Lodgis, furnished rentals and property law specialist