President of the Institute of Real Estate Services Management, Henry Buzy-Cazeaux returns to the article in the draft Budget for 2025 which increases the taxation of non-professional furnished rentals in the event of sale of the property.
The finance bill for 2025 continues to have surprises in store for us, and undoubtedly more bad ones than good ones. The reason is the country’s abysmal public deficit, which forces the government to look everywhere for money. The choice of method is now clear, and the taxpayer, particularly for real estate, is surrounded, threatened on the one hand by a reduction in the aid to which he was entitled, on the other by the risk of an increase in his taxes. Not to mention the consequences that the reduction in allocations to local authorities will have, for an amount of 5 billion…which they will undoubtedly seek to recover by an increase in local taxes at their own hands. The most recent news on these two facts to watch at the same time concerns the popular tax status of the non-professional furnished rental company. He had escaped many times from blows with a penknife or dagger, and he was intact. It will not emerge unscathed from the examination and vote of the finance bill for 2025.
Indeed, the text provides for a new method of calculating the taxation of capital gains in the event of transfer of the property. Until now, the taxable capital gain was calculated by subtraction between the acquisition value of the property and its resale value, in a classic way for real estate. Possibly, in the case of an operating asset, the acquisition costs and the renovation work were deducted from the differential value obtained. This calculation was carried out without consideration of the accounting depreciation to which the owner was entitled to carry out. Clearly, since the housing is productive, it is possible to record from an accounting point of view that it is subject to wear and tear and depreciation, and that its value gradually declines as the depreciation recorded each financial year and accumulated over the duration of the property. exploitation.
Furnished rental: here is how much your resale tax could be increased
A transfer after ten years will record a zero value of the accommodation in the seller’s accounts.
In principle, this depreciation is spread over a period of five to ten years, the loss of value recorded oscillating between 20% and 10% per accounting year, depending on the duration chosen by the taxpaying investor. In addition, and most importantly, as an exception with other assets deemed depreciable in the context of an economic activity, at the time of a possible resale of the asset, its owner is still exempt from reducing the residual value. of the amount of depreciation, which in the end reduces this value to zero.
We can clearly see the interest: we measure the added value between a purchase price and a market resale price by
difference between the second and the first. Of course, the value has generally appreciated over five, seven or ten years, but on the basis of a starting price which is itself not insignificant. In addition, the owner benefits from common law reductions applicable according to the duration of ownership, canceling the taxation after 30 years, and gradually reducing it until this deadline. From next year, if the draft budget is not modified on this point, the calculation will have to include depreciation, that is to say the value reductions made each year. Thus, a transfer after ten years, if the depreciation rate chosen is ten years, will record a zero value of the accommodation in the seller’s accounts. The subtraction between the stated value and the transfer price will be equivalent…to the price paid by the buyer, always deducting, of course, the reductions for the duration of ownership.
The government, once again in matters of taxation, stops in its tracks
Is this abnormal? Not in any way in economic terms. Certainly, the general tax code distinguishes between non-professional rental companies and professional rental companies, depending on the importance of their income and the share they constitute in the overall income of said taxpayer. To date, it has not subjected non-professionals to the logical regime for calculating added value, which constitutes an advantage. It is the removal of this advantage that some are indignant about. We can understand this when we see that the overall taxation of residential real estate is excessively heavy. It nonetheless remains true that it is a flower, if we allow ourselves the word to speak of a serious subject. The only problem is that the government, once again when it comes to taxes, stops in its tracks. On this basis, he must accept two further advances. First, the shortening of the
holding period of 30 years for cancellation of taxation in the event of capital gains on sale. We met her at twelve, at fifteen, and here she is at thirty. This duration, if it tends to stabilize the rental stock, interferes with the freedom of owners, by dint of being fiscally confiscatory.
Finally, the legislator must create this status of the investor in new or renovated existing housing that the sector is clamoring for, and which has become vital: French households are turning away from rental investment and will not return without visibility or fiscal stability. They also need economic recognition of their entrepreneurial commitment. The damping mechanism is designed for this. We cannot deny that several copies were returned to successive governments offering, as it were, butter and butter, with depreciation not impacting the added value. This exception is difficult to defend today, except to maintain that housing is so bad that it is necessary to allow the non-integration of depreciation in the calculation of the
taxable capital gain, in any case for purchases made over a given period, three years for example. There is no doubt, however, that the position of lobbies would be stronger if they did not deviate from fundamental economic logic.
Will this executive have the lucidity and courage to revisit real estate taxation, not only to find billions, but to bring fairness and intelligence to a system that notoriously lacks it?
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