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Understanding Airbnb Tax: How It Works and What You Need to Know About Income Tax on Airbnb Rentals

If you have spare room and you want to rent a room for a certain amount or a whole property with utility bills to pay for extra income, you should also know that you will be subject to an Airbnb tax regime and you have to pay tax.



Getting started with Airbnb taxes

In most cases, if your property qualifies as a furnished holiday letting , you'll luckily be entitled to a few tax reliefs and advantages. The taxable income received must imperatively be declared to the Council tax authorities in order to pay income tax, otherwise you will be in default of the legislation. The declaration is made on your Airbnb income tax and if you don't know how to proceed, don't hesitate to ask for assistance, a tax advice, tax advantages and tax reliefs, entrepreneurs relief and tax free allowances. You can also learn to defer capital gains tax and capital gains tax rate.


Tax on Airbnb income: How do you need to pay for Airbnb taxes ?

The majority of the accommodations available throughout the year on the Airbnb.fr platform are furnished (search more about capital allowances) properties by landlords. Therefore, they are directly functional for short-term Airbnb business rentals. As a private individual and Airbnb host, it is imperative to adopt the status of non-professional furnished renter or LMNP.


As Airbnb hosts, or if you are in a particular situation, you may get many benefits with a professional advice for your Airbnb rental, a simple tax software, the actual expenses...


Remember to pay tax when it exceeds the personal allowance when you rent out an Airbnb property. That same property can be tax free with some conditions.


Computation of taxes to be paid by the owner
Securing correct payment of taxes in your Airbnb rental will help you avoid unnecessary penalties.

However, it is important to know that this is a status that benefits from very precise regulations in terms of taxation. That is why it is important to declare all your earned income to the tax department. But there are different options available to you with a different capital gains tax regime in relation to your other income.


To make it simple, you can choose the real regime or the regime of commercial industrial taxable profits.


How does the real regime work for the taxation of Airbnb income when do you rent a room or a property?

If you have chosen the real regime, you must declare the full amount on the report rental income generated by the seasonal rental on your self assessment tax return as self employed. To do this self assessment tax return, you just need to indicate the total amount of rent you have received. Please note that the amount declared must be net of allowable expenses and without any charges.


Concerning the capital gains tax scale, it will be progressive in relation to the rental income and therefore subject to social levies. For more detail, do not hesitate to carry out a tax simulation in France from the governmental website. Same with Uk government with a planning permission.


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How does the system of commercial industrial profits work for the taxation of Airbnb gross income?

When the income you generate from the platform does not exceed a "personal allowance" of €72,600, you have the option of opting for the commercial industrial profits regime. Remember to consider the VAT threshold of £85,000. If your total Airbnb rental income exceeds this threshold, you will need to register for VAT.


Holiday Let Taxes

The taxation of furnished holiday lets or no then benefits from a greatly simplified tax system and a 50% is deducted for claiming expenses related to seasonal rentals. Nevertheless, it is necessary to know that a minimal deduction is then fixed at 305 €. If your investment property income on the platform has not exceeded this ceiling, you benefit from a capital gains tax exemption. There are several forms of Capital Gains Tax relief (Restriction on Tax Relief on Mortgage Interest). As Airbnb hosts you can get a entrepreneurs relief, a tax relief...


Regardless of the tax system you adopt, the declaration of Airbnb income is made at the time of the income tax return, i.e. in the spring and every calendar year. This means that you need to be familiar with the tax rules of seasonal rental in order to avoid finding yourself in breach of the law.


Airbnb taxes in France, what method to use to calculate them?

Calculating the tax on Airbnb total income depends directly on the tax system chosen.

For example, if you generate income of more than €72,600 per tax year, you automatically switch to the real tax system. In this case, taxation is based on a progressive scale for income tax.


For the BIC regime, the declaration is made on the gross earnings and the taxman will apply a 50% deduction to the charges and expenses that you have incurred on the seasonal rental.


Reading articles on tax implementation will give you the overview of the tax system for your business
Regulations on tax system in real estate depends on the property you own and how much it generates over a period of time.

It is therefore important to understand which charges and expenses can be tax exempted on your self assessment tax return. These are essentially Airbnb property furniture tax, management fees, depreciation, the costs of the seasonal Airbnb business rental platform, provisions for charges, insurance premiums, personnel costs as well as routine management such as repairs and maintenance.


Where to declare your Airbnb taxes?

Whether it is for the taxation of your main furnished holiday let, an Airbnb residence (your own home) or the taxation of your second home (a holiday home), the declaration that you need to declare is systematically made in a similar way, i.e. on your tax return.



The process for declaring Airbnb taxes in France

To do so, you must go to the heading "Airbnb earnings from non-professional furnished rentals". Box 5ND must be filled in for the declarant 1 and box 5OD for the declarant 2.


As soon as the tax return campaign starts, you will be systematically informed by mail or e-mail. If you choose the electronic version, you must connect to the website impôts.gouv.fr. From there, you can access your main tax return as well as the attached forms.


It will be useful to fill in the 2042-C-Pro form when you benefit from a minimum deduction of 305 €.


If you have chosen the real tax system, you will also need to complete the Cerfa 20/31 D.


Since 2020, a new obligation forces the Airbnb.fr platform to automatically transmit all earned income received by people with a seasonal rental. Therefore, it is useless to hide the profit you have received, because in case of tax audit, you will be in default.


Not declaring your Airbnb income will result in sanctions, because in the eyes of the tax authorities it is a case of fraud. However, if it is an oversight on your part, you can inform the tax authorities at any time within the framework of the right to error.


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Is there a difference in taxation between a primary residence and a secondary residence in european economic area (EEA)?

The tax authorities define a principal residence or main residence (your own home) as the place where you live at least eight months a year paying tax. When you receive rental main income of up to €760 per tax year because you rent a room, you are exempt from paying tax.


Therefore, it is impossible to rent your main residence for more than four months of the tax year. However, you are not obliged to respect this limit for a second home. But, you are obviously subject to taxable income according to the different conditions defined above.


A nice view in a room of a principal residence used as Airbnb property
Implementation of taxes in an Airbnb space depends on the type of ownership or residency in the property.

Why choose an Airbnb concierge?

If you are not comfortable with the various tax issues, you can get help from an Airbnb concierge with general maintenance that works full time. This is the case with the company Upperkey, which is known as a specialist in the field based in France, United Kingdom and US. Not only will your tax returns no longer be a worry, but you'll have tailor-made support to make the most of your vacation rental. In fact, Upperkey offers a turnkey service, which means that you can delegate the entire management of your seasonal rental property.


No need to worry about technical or administrative issues or to manage the publication of an ad and the reception of tenants, the concierge service takes care of everything.


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