A Complete Guide to Airbnb Rentals Taxation in 2024: What You Need to Know

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With the rise of short-term rental platforms like Airbnb, renting out furnished properties has become an attractive income-generating opportunity for many property owners. However, along with the income comes the responsibility of understanding the tax implications that accompany Airbnb rentals. In France, these earnings are subject to specific tax regulations, and recent changes to the tax laws in 2024 have altered the landscape for Airbnb hosts.

This comprehensive guide will walk you through everything you need to know about the taxation of Airbnb rentals in France in 2024, including the distinctions between professional and non-professional rental statuses, tax regimes, and changes introduced by the 2024 finance law.

Airbnb Rentals and Taxation: The Basics

In France, income from Airbnb rentals is considered a commercial activity rather than real estate income. This means that any revenue generated from renting out furnished properties is classified under Bénéfices Industriels et Commerciaux (BIC), or industrial and commercial profits. This classification has been in place since 2017, following the 2016 amendment to the French finance law.

Whether you rent out your property occasionally or on a regular basis, the income you earn through Airbnb or similar platforms is taxable. To qualify as a furnished rental, the property must be equipped with sufficient furniture to be deemed “habitable.” This includes basic items such as beds, tables, chairs, and kitchen appliances.

The taxation of Airbnb rentals largely depends on two factors:

  1. Your status as a landlord: Are you considered a professional or non-professional landlord?
  2. The tax regime you fall under: Are you subject to the real regime or the micro-BIC regime?

Professional vs. Non-Professional Furnished Rental Landlords (LMP vs. LMNP)

The tax treatment of Airbnb rentals varies based on whether you are classified as a Professional Furnished Rental Landlord (LMP) or a Non-Professional Furnished Rental Landlord (LMNP). Understanding the distinction between these two statuses is crucial as it determines your tax liabilities, potential deductions, and the way rental losses and capital gains are treated.

LMP (Professional Furnished Rental Landlord) Status

You are considered an LMP if you meet the following two conditions:

  1. Your annual rental income from furnished properties exceeds €23,000.
  2. The rental income surpasses your household’s other earned income (including wages, agricultural income, and non-commercial profits).

Benefits of LMP status:

  • Deduction of rental losses: As an LMP, you can deduct any losses from your overall taxable income without limitation. This can significantly reduce your tax liability if your rental income does not cover your expenses.
  • Capital gains tax benefits: LMPs are subject to professional capital gains tax rules, which allow for favorable exemptions after five years of operation. If your rental activity has generated less than €90,000 in revenue over the past two years, you may qualify for a complete exemption from income tax on short-term capital gains.

LMNP (Non-Professional Furnished Rental Landlord) Status

If you do not meet the requirements for LMP status, you are classified as an LMNP. While the tax benefits for LMNPs are less generous than for LMPs, there are still several advantages.

Benefits of LMNP status:

  • Limited loss deduction: While you cannot deduct rental losses from your overall income, you can offset them against future profits from the same rental activity for up to 10 years.
  • Capital gains tax: As an LMNP, the capital gains on your Airbnb rentals are taxed according to the individual property tax regime. This means you are eligible for income tax exemptions after 22 years of ownership and social contributions exemptions after 30 years.

Tax Regimes for Airbnb Rentals: Real vs. Micro-BIC

The tax regime you fall under depends on the annual rental income you generate and your choice of tax system. There are two primary taxation regimes for Airbnb rentals: the real regime and the micro-BIC regime.

Micro-BIC Regime

For landlords earning less than €15,000 annually from Airbnb rentals, the micro-BIC regime applies by default. This is a simplified taxation system that allows for a fixed deduction on your rental income. Prior to 2024, the income threshold for the micro-BIC regime was set at €77,700, with a 50% deduction on rental income. However, the 2024 finance law has introduced significant changes to this system:

  • New income threshold: As of 2024, the income threshold for unclassified furnished tourist rentals (such as Airbnb properties) has been reduced to €15,000 per year.
  • Lower deduction rate: The deduction rate has also been reduced from 50% to 30% for landlords earning less than €15,000 annually.

These changes mean that if your rental income exceeds €15,000, you must switch to the real regime, which offers a more detailed accounting of income and expenses but also allows for greater tax deductions.

Real Regime

The real regime applies to landlords whose annual rental income exceeds €15,000 or who opt out of the micro-BIC regime. Under the real regime, you are required to declare your actual expenses and income from Airbnb rentals. While this regime involves more detailed bookkeeping, it can often result in lower tax liabilities due to the ability to deduct the following:

  • Loan interest
  • Maintenance and repair costs
  • Property management fees
  • Depreciation of the property (excluding land)

The real regime is ideal for landlords with significant expenses, as it allows for a more accurate reflection of net rental income.

VAT and Airbnb Rentals

In general, Airbnb rentals are exempt from Value Added Tax (VAT) in France. However, VAT may apply if you offer additional services alongside the rental of your property. According to French tax law, VAT is triggered if you provide at least three out of four of the following services:

  1. Breakfast service
  2. Regular cleaning
  3. Linen provision
  4. Reception services (even if not personalized)

If you provide these services, the VAT rate applied is 10%, although certain exemptions may still apply if your total rental income remains below a specific threshold. Landlords with limited services may still avoid VAT under the franchise en base de TVA, which exempts small businesses from VAT obligations.

Declaring Airbnb Rental Income in 2024

The process for declaring income from Airbnb rentals varies depending on whether you are under the micro-BIC or real regime. Below is an overview of the key steps:

Micro-BIC Regime

If you qualify for the micro-BIC regime (with rental income under €15,000), you must report your gross rental income on your annual tax return. The income is entered in the 2042 C Pro form, in section 5ND for LMNP or 5KP for LMP.

The tax authorities will automatically apply the 30% deduction (as per the 2024 finance law), leaving you to pay tax on the remaining 70% of your rental income. If your total income is less than €305, you will not owe any tax.

Real Regime

If you fall under the real regime, you must submit a 2031 SD declaration form, detailing both your income and your actual expenses. This includes reporting any deductions for loan interest, maintenance, and property depreciation. The resulting net income is then reported on your 2042 C Pro form, in section 5KC or 5KI for LMP, or 5NA or 5NK for LMNP.

Airbnb Rentals and Social Contributions

Landlords who earn income from Airbnb rentals are also subject to social contributions. For LMP landlords, this involves paying into the social security system for self-employed individuals. LMNP landlords, on the other hand, are subject to social levies (17.2%), which include the CSG (9.2%), CRDS (0.5%), and solidarity levy (7.5%).

Conclusion

With the introduction of the 2024 finance law, the tax landscape for Airbnb rentals has evolved significantly. Whether you are a professional or non-professional landlord, it is essential to stay informed about the latest tax regulations and understand the implications for your rental income. By choosing the appropriate tax regime and taking advantage of deductions, you can optimize your tax situation and ensure that your Airbnb rentals remain a profitable venture.

For those unfamiliar with the complexities of tax law, consulting with a tax advisor can provide invaluable guidance and ensure that you are compliant with all legal requirements.

This guide has provided a detailed overview of the 2024 taxation rules for Airbnb rentals, offering practical advice to help landlords navigate their tax obligations efficiently.