All you need to know about the micro-tenure regime (2023)

Are you the owner-lessor of an empty rented accommodation and are you taxed in the property income category? Like your other income, this is subject to income tax. Under the conditions, you may be taxed in the micro-landlord tax regime. Depending on the amount of your fees and marginal tax band of your home, it is sometimes better to choose real mode than micro-earth mode.

What is the tenure regime of micro plots?

Scheduled for Article 32 of the General Tax Code (CGI), micro-earth mode forms a tax regime specific to income from property to be simplified. A bit like the micro-enterprise regime for self-employed benefits!

So when your the gross annual rent will not exceed 15,000 euros (without fees), you have a choice of 2 tax options:

  • micro earth
  • or taxation on a progressive income tax scale through the real regime.

Income from land is also subject to other taxes such as:

  • THE social contributions in the amount of 17.2%;
  • CEHR (extraordinary contribution to high incomes) if your reference tax income (RFR) exceeds €250,000 for a single person, €500,000 for a married couple subject to joint taxation.

Who can benefit from holding micro plots?

All landlords of accommodation offered for rent (or unfurnished) if income from ownership does not exceed 15,000 euros gross per year, fees not included.

The land income ceiling is assessed per calendar year, without taking into account the actual number of months of the lease. In other words, cannot be calculated pro rata temporis.

You must declare income from real estate:

  • Rent collected, excluding refundable fees;
  • Expenses that normally fall to the owner and that you have charged to tenants;
  • Subsidies and compensation you receive for your flat or house.

Be careful,The ceiling applies to the tax level of households. For example, if your spouse also rents a bare accommodation and wishes to opt for the micro plot regime, the rental income from your two accommodation must remain below €15,000 gross.

Finally, micro-earth management applies globally : this mode cannot be selected for one accommodation at the same time as the real mode for another accommodation.

On the other hand, you cannot claim ownership of micro plots if you rent:

Did you know ? If you rent your property through SCI, you can only choose micro-properties if you directly own the bare rental accommodation in addition to the shares in your company.

In micro-realities, you cannot deduct your actually paid expenses such as loan interest, insurance premiums or renovation. On the place, you get a 30% discountwhich represents all fees.

If you were previously taxed under the real regime and had deficits in previous years, you can deduct them from your net income from the land (determined under the micro-land ownership rules) under common law terms. Land deficits can therefore be attributed to land income generated over the next 10 years.

Micro-earth or real: which mode is the most advantageous?

You can choose real mode on option, if your rental income is less than 15,000 euros. On the other hand, once you cross the ceiling, reality mode is not an option but an obligation.

Option to deduct fees from the actual mode

In real mode you don’t benefit from the reduction, but you can deduct certain expenses. Article 31 of the General Tax Code (CGI) compiles a restrictive list, which includes in particular:

  • Costs of repairs, maintenance and improvement of property. On the other hand, construction, renovation or extension work is excluded;
  • loan interest,
  • Management costs and remuneration for guards and porters;
  • Premiums for unpaid rent guarantee insurance;
  • THE rental management feeswithin the annual limit;
  • The costs of repairs and maintenance of the common areas of the apartment.

Land deficit under the real regime

If your fees are more than the rent collected, then you are creating a soil deficit. This is deducted from your total income up to 10,700 euros per year. However, the fraction relating to loan interest cannot be deducted from the total income, only from the land income category for a period of 10 years.

If your total income is not enough to absorb the land deficit within this limit, you can carry forward the excess deficit above your total income for 6 years.

On the other hand, an excessive shortfall that exceeds €10,700 is only transferred to the property pension for the following 10 years.

Therefore, to determine whether it is better to choose a micro plot or a property, you need to take into account:

  • The amount of your fees : if they are larger than the reduction, it is better to choose the right one;
  • The possibility of creating a soil deficit : choose the real thing if you are considering or have incurred a large expense, especially work.

Please note that the inclusion of the property deficit in the total income will be contested by the tax administration if you do not keep the rental housing by December 31 of 3.Thursday year.

Micro plot or real estate: an example to choose from

Your tax household’s TMI is 30%. Your real estate investment generates the following income and expenses in 2023:

  • Annual rent: €12,000
  • Deductible expenses: EUR 1,448
  • Cost of work: €20,000
  • Interest on the loan: €1,000

1 – Variant for micro-earth mode

Annual rents €12,000
Representative reduction of fees for micro plots 30%
Net Land Revenue according to progressive scale €8,400 (i.e. €12,000 x 30%)
Income tax €2520
Social posts €1444
Total taxes €3,965
Calculation of taxation in the micro-plot regime

2 – Option for real mode

Annual rents €12,000
Interest on the loan €1,000
Deduction of fees and labor €21,448
Net taxable income from property (year N) €0
Land deficit as a share of total income EUR 9,448 (ie 12,000 – 21,448)
Additional income tax savings in N €2,834 (9,448 EUR x TMI 30%)
Deficit accruing to land revenue over the next 10 years €1,000

✅ For the taxpayer, the option for the real regime in this example is much more interesting:

  • instead of paying €3,965 on your property income in 2023, will not pay any tax by opting for real mode,
  • besides, the land deficit will be deducted from the total revenue and will give a an additional tax saving of €2,834,
  • after all, the remaining loan fees can be deducted from the income of the property in the following years (it is a kind of future debt on the taxes owed).

On the other hand, if you didn’t do any work, the micro-earth mode variant would be much more beneficial than the real mode.

Whether you declare online or on paper using the Cerfa 2042 form, enter the gross amount of rent in box 4BE. Do not take the reduction into account, it is applied by the tax authorities.

If you own accommodation abroad, you must include land revenue received abroad in the awarded amount and fill in the 2047 declaration on “income received abroad”.

If the income you earn is subject to VAT, you must declare the amount exclusive of VAT.

However, you do not need to fill in the attached statement of income from property (statement no. 2044).

If you find that real mode is more convenient for you, you can opt out of micro-earth mode simply by doing so filling out the Cerfa 2044 form during the income declaration campaign.

Know : the real regime is irrevocable for 3 years. At the end of this period, you can restore the election to the real regime using statement 2044 “Declaration of income from property”.

Land revenue is subject to a deposit taken monthly or quarterly directly from your bank account.

The deposit is calculated on the basis of the last declared and taxed income from the property to which it is charged withholding tax rate.

➡️ For example, the deposit to be paid from January 2024 will be calculated based on your 2022 income declared in 2023. Don’t forget to make reserves!

Is it more profitable to rent a furnished one?

In furnished tenancy there is a regime equivalent to the micro-landlord: it is the micro-BIC regime. Compared to micro-earth management, micro-BIC has the advantage of:

  • Suggest a more generous allowance 50%;
  • Have higher thresholds : 77,700 euros for renting classic furniture, 188,700 euros for furnished tourist accommodation and guest rooms.

You may also prefer a real diet. In a furnished lease, it entitles:

  • Deduction of all fees carried out in the interest of the operation and not only in the restrictive list of fees;
  • To practice depreciation on buildings (except land) and on furniture to take into account their loss of value over time.

If you create a deficit, it cannot be included in your total income, if you do not meet the criteria to be considered a Professional Furnished Furniture Rental (LMP). While in the real mode of bare rent you do not have to fulfill this condition.

FAQs

What is microproperty allowance?

The reduction of micro ownership is 30%. By comparison, in the micro-BIC regime for furnished rentals it is 50%.

How does micro-earth mode work?

To calculate the amount of income tax and social security contributions, you must apply the 30% discount on the property income you receive.

What are the conditions for using the micro plot tenure regime?

Your tax household may not withdraw more than 15,000 euros in annual gross income from real estate. In order to benefit from this regime by being associated with SCI, you must also own the property outright, even a bare lease. The administration of micro-plots does not apply to income from the rental of a historical monument, real estate under the law of Malraux, Périssol, Robien or Borloo.

What are the benefits of micro-farming?

You get a 30% discount, which the tax authorities apply directly to the amount of your income from the property. Declaration of property income is therefore simplified.

What is the difference between micro estate and real estate management?

In micro properties you cannot deduct fees, you will apply a reduction in gross rent to determine IR and social security premiums. In real estate mode, you can deduct certain charges under certain conditions and create a land deficit that can be charged and transferred to your total income.

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