TLDR: Professional furnished rental operators can benefit from several capital gains tax exemptions: exemption after 5 years of activity (Art. 151 septies CGI), full or partial exemption based on revenue (€90,000 or €126,000), long-term holding discount (Art. 151 septies B CGI), and schemes for business contributions/transfers (Art. 151 octies, 41, 151 septies A, 238 quindecies CGI, with exclusion of real estate capital gains for the last two). For para-hotel businesses, the thresholds are increased to €250,000 and €350,000.
Exemption linked to the duration of activity
Article 151 septies of the CGI provides for an exemption from capital gains tax for professional furnished rental operators who have been carrying out their activity for at least five years. This scheme is strictly conditional on the continuity of professional activity.
Exemption based on revenue level
Professional furnished rental operators can benefit from:
- full exemption if their annual revenue is less than €90,000;
- partial exemption if their revenue is between €90,000 and €126,000. These thresholds determine access to the scheme based on turnover.
Long-term holding discount
Long-term capital gains realised upon the sale of properties used for the professional furnished rental activity may benefit from a 10% discount per year of ownership beyond the fifth year, in accordance with Article 151 septies B of the CGI. This discount applies to real estate assets used for the business.
Schemes for business contributions and transfers
Professional furnished rental operators can access preferential schemes for:
- contributions of a sole proprietorship to a company (Art. 151 octies CGI);
- gratuitous transfers (Art. 41 CGI);
- onerous transfers (Art. 151 septies A and 238 quindecies CGI). Exception: capital gains relating to real estate assets are excluded from the schemes under Articles 151 septies A and 238 quindecies of the CGI.
Specific scheme for para-hotel businesses
For bed and breakfast and tourist furnished rental activities falling under the para-hotel regime (due to the additional services offered), the exemption thresholds under Article 151 septies of the CGI are increased to €250,000 for full exemption and €350,000 for partial exemption.
Additional schemes
Professional capital gains for furnished rental operators are subject to the short-term or long-term capital gains regime (Art. 39 duodecies et seq. CGI). The assets concerned must be recorded in the business assets to be eligible for exemption or discount schemes.