The tax bill will increase for many French people.
It was a paradise for tens of thousands of owners. A dream opportunity, almost too tempting, which many took advantage of, and which remained in force for years. But before long El Dorado will end and we will have to put our hands in our pockets. Goodbye to the great leniency of the tax authorities, the rules will change and the bill will increase. For those interested, this will be around 370 euros more to pay in taxes starting from 2025.
This change will affect approximately one million owners. If it is, obviously, a tightening of taxation for these families, it is in reality a simple rebalancing that will now have to be added to the various, already incompressible – and growing - expenses inherent to owning a house or apartment.
For many years, owners have developed a completely legal way to increase their income: short-term rentals. The rise of AirBnb has contributed to this wave, but other platforms like Leboncoin or Abritel also make it easy to offer your property and be connected to vacationers, all with a secure transaction.
Enough to earn more, without paying too much tax. Until now only 50% (or 29% for classified tourist accommodation facilities) of the income received was subject to taxation. From now on 70% (or 50% for classified tourist establishments) of earnings will be subject to taxes. A non-negligible increase.
According to the director of Airbnb for France and Belgium, Clément Eulry, “the average income generated annually is 3,900 euros gross”, he explained Free midday. Currently this amount corresponds to 920 euros of tax (based on a marginal rate of 30%). In 2025 the amount will rise to 1290 euros, or an additional 370 euros.
The increase in taxation on short-term rentals is not linked to the various current increases. The project has been carried out since the spring of 2023 by two deputies (Annaïg Le Meur -EPR- and Iñaki Echaniz -PS-) to reduce the number of seasonal rentals to allow locals and workers to find accommodation more easily, particularly in Brittany, the Basque Country, on the Mediterranean coast or even in Corsica. Until now, tax rules encouraged short-term rentals. Will this tightening allow the trend to be reversed?
Title: Navigating the New Tax Landscape for Homeowners in France
Interviewer: Welcome to Time.news! Today, we have the pleasure of speaking with Jean Dupont, a tax expert and resident economist. Jean, thank you for joining us.
Jean Dupont: Thank you for having me. It’s a pleasure to be here.
Interviewer: There’s been some buzz around the upcoming tax changes in France that will impact homeowners significantly. Can you shed some light on what these changes entail?
Jean Dupont: Certainly! Beginning in 2025, many French homeowners can expect an increase in their tax bills, with an estimated rise of about 370 euros per year. This change is poised to affect around one million property owners across the country.
Interviewer: That’s quite a substantial number of people. How do you think these increases will affect the average homeowner?
Jean Dupont: The increase will undoubtedly strain the budgets of families who own homes. It’s important to view this as a rebalancing of the taxation landscape. Many homeowners have enjoyed a relatively lenient tax regime for years, particularly those involved in the booming short-term rental market, fueled significantly by platforms like Airbnb.
Interviewer: Speaking of short-term rentals, how do you see this tax adjustment impacting those who have relied on platforms like Airbnb to supplement their income?
Jean Dupont: The rise of short-term rentals has indeed been a vital source of income for many homeowners. However, as taxation tightens, those who are leveraging their properties for short-term rentals may find their profits reduced. Increased taxes may encourage some to reconsider their strategies or even shift back toward long-term renting.
Interviewer: Some would argue that the government is taking a step back from creating a favorable environment for property ownership. Do you think these changes will deter people from investing in real estate in France?
Jean Dupont: It’s a valid concern. While some potential investors may hesitate due to the new tax burden, real estate has always been considered a solid investment in the long term. Many may still find value in owning property, especially as the market adjusts. However, the ease of generating income through property is indeed being curtailed.
Interviewer: Besides the tax increase, what other factors should homeowners be aware of as they prepare for these changes?
Jean Dupont: Homeowners should prepare for the rising costs associated with property ownership in general—rising maintenance costs, utility bills, and the ever-evolving regulations around rentals. It’s crucial for them to assess their financial situation comprehensively and possibly consult with financial advisors to adapt to this new reality.
Interviewer: What advice would you give to current and prospective homeowners to navigate this impending shift?
Jean Dupont: I would advise homeowners to start budgeting for these additional expenses now. Look into the long-term sustainability of short-term rental practices, consider all potential revenue streams from the property, and remain informed about tax regulations. Staying proactive is key.
Interviewer: Excellent insights, Jean. Thank you for helping us unpack these changes. It’s clear that preparation will be essential as we move forward into this new tax landscape.
Jean Dupont: Thank you for having me! It’s essential that homeowners remain informed and proactive as these changes unfold.