Taxes: the tax treatment of land deficits
Landlord landlords may notice a land deficit when their taxable rental income is lower than their deductible land charges. Depending on the case, this deficit is attributable to their other taxable income for the year or to their property income for subsequent years.
Realization of a land deficit
In the case of renting unfurnished accommodation or unfurnished business premises, the rents are taxable in the category of property income. When you fall under the micro-land regime, the tax administration calculates their taxable amount, applying a 30% allowance on your gross receipts collected during the year. When you come under the real tax system, it is up to you to determine their taxable amount, by deducting from your gross receipts the fees and charges that you have incurred during the year (management fees, insurance, charges co-ownership, taxes, loan interest, etc.).
You cannot be in deficit when you fall under the micro-foncier regime because you are subject to tax and social security contributions on 70% of your annual rents. On the other hand, when you come under the real plan, you can register a deficit if your deductible expenses are higher than your rents. This situation can arise in particular when you undertake expensive work on the leased property or when you have invested on credit and bear significant loan charges.
The allocation of the land deficit
The fraction of the land deficit recorded in a year which results from the deduction of your land charges other than interest and borrowing costs is deductible from other taxable income of your tax household received in the same year (salaries, profits, pensions, etc.) , within the limit of 10,700 euros. This imputation ceiling is raised to 15,300 euros if all or part of your deficit comes from accommodation rented under the Cosse scheme (this scheme allows you to benefit from tax advantages in return for accepting to rent at a affordable to tenants with modest means).
The fraction of your land deficit exceeding 10,700 euros (or 15,300 euros) and that resulting from the deduction of your interest and loan costs are not chargeable to your other taxable income received in the same year. They are deductible only from property income collected by your tax household over the following ten years.
Good to know: Lessors falling under the real tax system must complete a declaration of land income n ° 2044 to determine their taxable property result, to be attached to their general declaration of income n ° 2042. In the event of a deficit, this declaration makes it possible to determine the portion attributable to other taxable income for the year and the portion that can be carried forward to property income in subsequent years.
You cannot see a land deficit when you come under the micro-land regime. However, if you have recorded property deficits during the previous ten years, while you were subject to the actual tax regime, you can charge their portion that can still be carried forward to your rents for the current year. In this case, the charge is made against your taxable rents for the year, after application of the 30% allowance attached to the micro-land regime.
The consequences of charging a land deficit
If a property deficit is charged to your other taxable income for the year, you are obliged to continue renting the property that generated it until December 31 of the third following year. For example, if you notice a deficit in 2020 and charge it against your other taxable income for 2020, you will have to continue to rent the loss-making property until December 31, 2023. If you stop renting it or if you dispose of it before then deadline, the imputation of your deficit will be called into question. In other words, the tax administration will recalculate your overall income and your property income for the last three years without taking the deficit into account, and they will ask you to pay additional tax. This questioning may take place until December 31 of the third year following that of the termination of the rental, even if the years concerned are prescribed on that date.
VANEAU Immobilier
Tel : 01 48 00 88 75
contact@vaneau.fr
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