French Gites 5 of 5 - Professional renters
Finally, the last part of this blog series – taxation of gites as a Louer en Meuble Professionnel. This only applies if (a) your gross turnover is over 23000 Eur/year and (b) furnished rentals are the largest part of your active income.
The big gain LMP has over LMNP is that – if you operate for over five years – there are no tax charges for capital gains you make when you sell the business if the turnover is below a defined limit for the previous two years. HOWEVER this does not apply to social charges – and there is a major watchout with these.
There are again two options to choose on taxation for LMP – similar in concept to those for LMP – but with very different numbers
- The simplified regime. Here you get the same deductions for income tax as you do for LMNP (30%, 50% or 71%) and pay income tax at your marginal rate. However social charges are different – you pay 6% of your gross turnover if you are a classified gite, but around 21-22% if unclassified. So very important to get your official star rating.
- Regime Reel. This is again in concept similar to LMNP and you take your turnover less all costs – including depreciation – and then come up with a final profit figure. Income tax is simple – marginal rate. Social charges are not simple and even if you look online at tax calculators these are hard. You will pay the higher of either around 40% (!) of your profit as social charges or a minimum sum of around EUR1300.
Why are social charges so high? The difference vs LMNP is this is seen as your profession. So you are paying for pensions, social contributions etc – not just investment income.
The same watchout as LMNP applies to LMP on Regime Reel on depreciation – when you sell it is added back to the calculation. With the social charges being at this level you may want to take a lot of care going down this route.
That concludes my mini-series on gites and with 2025/26 UK tax year closing I will go back to posts on UK tax. If you want more info – please do get in touch.