Non-Resident tax return - rental income

 I've just written to our owner's to remind them to look out for Tax d'Habitation and Tax Fonciere bills which usually arrive at this time of year. It's best to chase these up at the local Tresor Public, if you are able to put in place an automatic payment, so much the better and you can forget about it. Property taxes are low in Paris but just in case you feel like you got lucky as you haven't received anything, please don't just write it off! If your Tax Habitation or Fonciere is not paid, the "Fisc" will have no hesitation in freezing your bank account. Imagine the chaos caused by your direct debits for everything from the internet subscription to your electricity bouncing (resulting in your tenants losing power during their stay and the ancillary very long and boring re-instatement of the standing orders).

Don't think you could get away with it either by saying you didn't know you had to pay….. In France you are under obligation to know the law and being a foreigner will not help you persuade officals otherwise. We have obligations here and the authorites take a very dim view of our less rigid attitudes to the paperwork and minutae of daily life.

If you purchased your property in 2008 you will have nothing to pay this year but mark your calendars to make sure that you check next year that the documents arrive.

If you own property here and derive rental income through it, it’s necessary to file a Tax Declaration for a non-resident.  The law says to file, and it is especially necessary if the funds are deposited in your French bank account.  If your property is financed, there would probably be no tax to pay.  Interest and expenses are fully deductible.  I would strongly advise you to file and if you would like us to recommend a Tax specialist you can avoid excess preparation time (and therefore fees) accumulating at a later stage. 

Renting out an apartment or house in France always generates French income that is taxable in France. This is true even if the owner and tenant are American or UK/EIRE residents, and the payment is made in dollars in the U.S or Sterling etc. Now, one may ask, "how would the French tax inspector know that the place is rented to start with?" Just keep in mind that there are in fact telltale signs, such as the tax d´habitation applying to a secondary residence, the electrical meter in the owner’s name and high electricity consumption most of the year – not to mention the Gardien(ne) who figures out the situation within a couple of months after the rental business has started. Believing you are safe from tax inspectors because you have never had a problem gives you a false sense of security. Once tax cheating has been identified, the French tax inspectors tend to wait until it has been going on for three years before striking. This is because three years is the time period for the statute of limitations and they want to make the audit worthwhile.

Please contact us for further advice if you would like, by email and if need be we can also schedule a call.

Comments

[Farzana Alam]

Hello,

my mom has a property in Paris but she now lives in Montreal. The property tax bill was sent to her in February'09 for 2008. She mailed the requested information by regular mail the first week of March. Today 22nd of April she has received a fine as apparently they have not received her bank information to withdraw the sums.

She is sending a check for the original bill tomorrow and keep a receipt from the post office this time.

Can she appeal for the fine to be forgiven? what would be the procedure? and in the future can she set up her payments online? From your article above we now know that she can set up autumatic withdrawal.

We would very much like to know if we can appeal for the fine to be removed?

Is there a website for French Property Tax Collector where the owner's records can be seen and payments made through?

Thanks ever so much.