The advertising period has started recently. Taxpayers usually wait until the last few days, so it’s never too late to share some tips and common mistakes about reporting rental income. Christophe Duprat, Co-Founder and CEO of Qlower, lists the five most common mistakes of 2023 identified on the basis of several thousand users of the estate accounting and tax solution.
3 million taxpayers Declaration of rental income, land for rent and BIC for furnished rentals. Whether you are offering empty or furnished housing, the most common mistakes are the same:
- Do nothing, say nothing
While the Directorate General of Public Finances (DGFIP) has created the property information collection, it has become mandatory to disclose the destination of the house you own. Primary, secondary or for rent residence, you have until July 1st to determine your use of each property you own. This information will make it possible to better target housing tax and vacancy tax from 2024. If a property is offered for rent, rental income will be expected. Beware of donors who let things drag on. Cost to the owner:
-> A fine of 150 euros For every real estate property held due to a forgotten verification in My Real Estate (forgiveness through December 2023).
-> 20% additional tax When the declaration is made after receiving official notice, and 40% after 30 days
- Simply copy the amounts from the tax return aid that the principal sent
When your property is managed by an agency or property manager, the latter sends a declaration assistance document in January. They include gross rental income, management fees and therefore income to be declared. Most of the time, this document omits deductible expenses that you pay without informing the principal. property tax (850 euros), Mandatory rental insurance (140 euros), loan interest (500 to 2000 euros in most cases). The top is reached when the manager simply subtracts the €20 regulatory fee from the rental income!
Cost to the owner:
-> 3,000 euros are not deductible from deductible expenseswhich amounts to €1,400 in excess tax on rental income
- Take it easy with smaller diets
Small schemes make it possible to avoid bookkeeping and tax only part of your income: 70% of rental income and 50% of rental income furnished (29% for furnished tourist rentals). Once your deductible expenses exceed these amounts, it becomes interesting to declare your rental income in riyals. But above all, micro-regulations discourage owners from maintaining or improving the habitat they rent. Thus, their property deteriorates, becoming less attractive because the business brings no additional discount. Small plans are the best way to let rental properties fall into disrepair.
Cost to the owner:
-> housing deterioration, increased rental space, risk of not being able to rent out your property according to its energy label
-> the impossibility of deducting the costs incurred for the maintenance in good condition of the accommodation offered for rent
- Performing work with unauthorized craftsmen
Under real regulations, renovation and improvement work is deducted from the rental income… when the bill justifies it! Working without an invoice is the same as working without discounting that work. €1,000 paid without an invoice does not erase €1,000 of the rental income. For lessors with a 30% tax bracket (+17.2% social contribution), deducting this business amounts to cutting taxes on rental income by half as an expense. Doing without an invoice to “earn” 20% VAT means losing 30% of the business amount as a tax deduction.
Cost to the owner:
-> For 1000 euros of work with the invoice, I finally paid 800 euros without an invoice, the planned saving of 200 euros erases a deduction of 472 euros. You finally lose 272 euros and get a ten-year guarantee!
- Do not renegotiate what is renegotiable
In this new context of inflation and rising rates, allowing costs to increase without trying to renegotiate some of them is a common mistake landlords make. To the extent that they are interested in signing the contract, the continued increase in insurance can be countered by renegotiating savings. there Lemoyne Law It is now one year old and has enabled thousands of borrowers to renegotiate their loan insurance. As a result, today we welcome savings of thousands of euros. Feel free to play competitor in Lessor Insurance (Simple Savings), Multi Risk Home Insurance, and especially Loan Insurance!
Cost to the owner:
-> For the €100,000 borrowed, switching from insurance at a cost of 0.45% to 0.15% (rates noted in Qlower after renegotiation), generates a savings of €6,000 per tranche of €100,000 over the credit term.
We notice several other errors that our teams proactively correct, such as deduction of all loan repayments (while paid-in principal is not deductible), risky creation of depreciation in furnished rentals, etc. For this demonstration period and throughout the year, the Qlower teams are at your disposal and support you with real/small simulations, accounting production and rental income returns whatever your situation.
Tribune Posted by Christophe Duprat, CEO, Qlower
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