How to declare and optimise the taxation of your rental income? (micro-foncier, actual-expenses regime, property deficit 2026)
Tax lawyer in Paris – filing, optimisation and defence of your rental income
Summary
- Income concerned: rents from the unfurnished letting of dwellings, commercial premises or land. They are subject to income tax at the progressive scale and to social security contributions of 17.2%.
- Two regimes: the micro-foncier regime (annual gross rents up to €15,000, flat-rate allowance of 30%) or the actual-expenses regime (régime réel: deduction of actual expenses, return no. 2044).
- Property deficit: may be offset against total income up to €10,700 per year, raised to €21,400 for certain energy renovation works paid up to 31 December 2027.
- Frequent audits: deducted expenses, works and deficits are regularly checked by the French tax authorities, in principle for three years.
- Role of the tax lawyer: choosing the right regime, securing your return, defending your interests in the event of a tax audit or litigation.
What is rental income (revenus fonciers) and how is it taxed?
Rental income consists of rents received for letting unfurnished real estate: a dwelling, commercial or professional premises, land, a parking space. Income from furnished lettings falls into a different category (BIC).
- Income tax: net rental income is added to your other income and taxed at the progressive scale.
- Social security contributions: 17.2%. The CSG increase on investment income decided for 2026 does not apply to rental income.
- Withholding at source: income tax and social security contributions are paid in instalments, calculated on the income declared.
My work begins with a detailed analysis of your personal wealth situation and your rental income, in order to identify the most suitable tax options.
Micro-foncier or actual-expenses regime: which one should you choose?
The choice of regime determines the taxable amount. It depends on the level of your rents and your expenses.
| Criterion | Micro-foncier | Actual-expenses regime |
|---|---|---|
| Eligibility | Annual gross rents up to €15,000, excluding special regimes | Mandatory above €15,000; optional below |
| Expenses | Flat-rate allowance of 30% | Deduction of actual expenses: loan interest, works, property tax, insurance, management fees |
| Return | Return no. 2042, box 4BE | Return no. 2044 (or 2044 spéciale), result carried over to the 2042 |
| Property deficit | Not possible | Possible: offset against total income within certain limits |
| Commitment period | None | Irrevocable option for 3 years |
The actual-expenses regime becomes worthwhile when your expenses exceed 30% of rents. I help you compare the two regimes before you commit.
How to declare your rental income correctly?
The return requires rigour and precision. Common errors can lead to reassessments.
- Micro-foncier: enter the gross amount of rents in box 4BE; the 30% allowance is applied automatically.
- Actual-expenses regime: complete return no. 2044 property by property, then carry the result over to the 2042.
- Deductible expenses: deduct only the expenses provided for by law. Construction, reconstruction or extension works are not deductible.
- Occupancy declaration: report any change of tenant or occupancy in the “Biens immobiliers” (Real estate) service of your impots.gouv.fr account.
I assist you in preparing your returns and meeting the deadlines set by the French tax authorities.
How to use a property deficit?
A property deficit arises under the actual-expenses regime when your expenses exceed your rents. It can reduce your total income, within strict limits.
- General ceiling: €10,700 per year may be offset against total income.
- Increased ceiling: €21,400 for energy renovation works paid up to 31 December 2027, where the dwelling moves from energy class E, F or G to class A, B, C or D.
- Loan interest: the portion of the deficit arising from interest may only be offset against rental income.
- Carry-forward: any excess is carried forward against rental income for the following ten years.
- Letting commitment: the property must remain let until 31 December of the third year following the offset, except in cases provided for by law (dismissal, disability, death, compulsory purchase).
I help you optimise the offsetting of these deficits while complying with the statutory ceilings.
What should you do in the event of a tax audit on your rental income?
- Limitation period for reassessment: the French tax authorities may in principle adjust your returns until the end of the third year following the year of assessment (Article L169 of the Book of Tax Procedures (LPF)).
- Points examined: reality and nature of works, supporting documents for expenses, compliance with the letting commitment, regime declared.
- Proposed tax reassessment: you have 30 days to respond. Your response must be reasoned and documented.
- Litigation: if the disagreement persists, a prior claim is mandatory before bringing the matter before the administrative court.
- Payment difficulties: payment extensions may be requested from the public accountant.
To find out more: defending yourself during a tax audit and tax litigation.
Why use a tax lawyer?
- Choice of regime: quantified comparison of micro-foncier / actual-expenses regime and analysis of the consequences over several years.
- Securing your returns: classification of works, substantiation of expenses, monitoring of deficits carried forward.
- Wealth strategy: tax advice on your rental investment projects and on the transfer of your real estate.
- Defence: assistance at every stage of an audit, response to the proposed tax reassessment, representation before the administrative court.
- Confidentiality: personalised support, covered by professional secrecy.
To review your situation, book an appointment.
FAQ
My rents are below €15,000: can I opt for the actual-expenses regime?
Yes. You simply need to file return no. 2044. The option is irrevocable for three years.
It is generally worthwhile when your actual expenses exceed 30% of your rents, for example if you have a loan or significant works.
Which works can be deducted from rental income?
Repair, maintenance and improvement expenses are deductible under the actual-expenses regime.
Construction, reconstruction or extension works are not. The dividing line is sometimes difficult to draw: a prior analysis limits the risk of reassessment.
What happens if I sell the property less than three years after offsetting a property deficit?
The letting commitment is not met. The deficit offset against total income is in principle called into question, except in cases provided for by law (dismissal, disability, death, compulsory purchase).
Is rental income affected by the 2026 CSG increase?
No. Income from unfurnished lettings remains subject to social security contributions at the overall rate of 17.2%.
Glossary
Micro-foncier: simplified regime; flat-rate allowance of 30% on gross rents.
Actual-expenses regime (régime réel): regime allowing the deduction of expenses actually incurred.
Property deficit (déficit foncier): excess of expenses over rents, under the actual-expenses regime.
Limitation period for reassessment (délai de reprise): the period during which the French tax authorities may adjust a tax assessment.
Further reading
- Articles 14 to 33 quinquies of the French General Tax Code (CGI): definition and determination of rental income.
- Article 32 of the CGI: micro-foncier regime.
- Article 156, I-3° of the CGI: offsetting of property deficits.
- Article L169 of the LPF: limitation period for reassessment.
- BOI-RFPI-DECLA-10: micro-foncier regime; form no. 2044 and its instructions.
- Real estate capital gains
- Foreign rental income
- Property abroad
