How Much Income Tax Will I Owe?

Thanks to the VAT refund scheme combined with short-term rental activity, one of the most compelling advantages is the significantly reduced income tax burden—often amounting to zero—for up to 30 years.

Under current regulations, when declaring rental income, the French tax authorities only consider 70% of the net profit for income tax calculations

For example, if your property generates €20,000 in net profit annually, only €14,000 would be taxable. At the flat income tax rate of 15%, this results in a tax liability of just €2,100 per year.

However, there’s an even greater benefit: you can offset the original construction value of the property against your taxable income. So, if your property was built at a cost of €500,000, this amount can be used to reduce or even eliminate income tax over time.

Continuing the example above, your €2,100 annual tax liability could be offset against the €500,000 construction value, resulting in no tax payable that year. You would still retain €497,900 in remaining offset value—available to use across future years, potentially for decades.

⚠️ Please note – 2025 Reform: impact in the event of resale

Since the 2025 Finance Act, depreciation deducted each year is no longer 'lost' to the tax authorities: it is now reincorporated into the calculation of taxable capital gains when the property is resold.This means that it reduces taxable income during operation... but increases the taxable base upon exit.

However, the reductions for duration of detention remain applicable :

• Income tax exemption after 22 years of ownership.
• Total exemption from social security contributions after 30 years.

This reinstatement does not apply to goods operated in certain non-tourist service residences (for example: senior, student or medical residences), under contractual conditions