In the event of the rental of unfurnished accommodation or unequipped professional premises, the rents are taxable in the category of property income. When you come under the micro-land regime, the tax authorities calculate their taxable amount, by applying a 30% reduction on your gross receipts collected during the year. When you come under the actual tax system, it is up to you to determine their taxable amount, by deducting from your gross receipts the costs and charges you have incurred during the year (management fees, insurance, co-ownership, taxes, loan interest, etc.).

You cannot be in deficit when you come under the micro-land regime because you are subject to tax and social security contributions on 70% of your annual rents. On the other hand, when you come under the real regime, you can record a deficit if your deductible expenses are higher than your rents. This situation can arise in particular when you undertake costly work in the leased property or when you have invested on credit and bear significant borrowing costs.

The fraction of the property deficit recorded in a year which results from the deduction of your property charges other than interest and loan costs is deductible from the other taxable income of your tax household received the same year (salaries, profits, pensions, etc.) , within the limit of 10,700 euros.

This allocation ceiling is increased to 15,300 euros if all or part of your deficit comes from accommodation rented under the Cosse system (this system allows you to benefit from tax advantages in return for agreeing to rent at a affordable to low-income tenants). The fraction of your property deficit exceeding 10,700 euros (or 15,300 euros) and that resulting from the deduction of your interest and loan costs are not chargeable against your other taxable income received the same year. They are deductible only from property income collected by your tax household over the following ten years.

Good to know: Lessors under the real tax system must complete a property income tax return no. 2044 to determine their taxable property income, to be attached to their overall income tax return no. declaration makes it possible to determine the portion attributable to other taxable income for the year and the portion that can be carried over to property income for subsequent years.

You cannot be in deficit when you come under the micro-land regime because you are subject to tax and social security contributions on 70% of your annual rents. On the other hand, when you come under the real regime, you can record a deficit if your deductible expenses are higher than your rents. This situation can arise in particular when you undertake costly work in the leased property or when you have invested on credit and bear significant borrowing costs.

If a land deficit is charged to your other taxable income for the year, you are obliged to continue renting the property that generated it until December 31 of the third following year. For example, if you find a deficit in 2020 and charge it against your other taxable income for 2020, you must continue to rent the loss-making property until December 31, 2023. If you stop renting it or if you transfer it before that due date, the imputation of your deficit will be called into question. In other words, the tax administration will recalculate your overall income and your property income for the last three years without taking into account the deficit, and it will ask you to pay additional tax. This questioning may take place until December 31 of the third year following that of the termination of the lease, even if the years concerned are prescribed on this date.

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