TLDR: Deductible expenses from property income in France include repairs, maintenance, improvements, eviction allowances, temporary housing costs, and subsidized work on cultural heritage properties. Excluded are expenses for work under a Vente en l'État Futur d'Achèvement (VEFA) contract for renovation, those linked to specific tax reductions, and reconstruction or expansion work.
Deductible expenses
Deductible expenses from property income include:
- Repairs, maintenance, and improvements: routine work such as replacing damaged fixtures or repainting.
- Eviction allowances: to relocate the property under better conditions.
- Temporary housing costs: for the tenant during work, if justified by normal property management.
- Subsidized work: for cultural heritage properties, with the obligation to add the subsidy to taxable income.
Non-deductible expenses
The following expenses are not deductible:
- Work under a Vente en l'État Futur d'Achèvement (VEFA) contract for renovation.
- Expenses benefiting from specific tax reductions, such as "Malraux," "Duflot/Pinel," or tourist residences.
- Reconstruction or expansion work, considered capital expenditures.
- Work to reoccupy the property after a rental period.
Who can deduct work expenses?
Deduction of expenses is reserved for property owners earning rental income. However, there are important exceptions and limits:
- The usufructuary (nu-propriétaire) cannot deduct expenses incurred for work.
- The owner who reoccupies the property after a rental period loses the right to deduct subsequent work expenses.
Required documents for deduction
All deducted expenses must be properly documented. Required justifications include:
- Detailed invoices for materials and labor, specifying amounts, names, and addresses.
- URSSAF receipts for wages paid to workers, including the employer’s and employee’s names, wage amount, and property address.
- For condominium work, the deduction is allowed only in the year the syndicate actually pays the suppliers.
Transitional rules for 2018 and 2019
Special transitional rules apply to work paid for in 2018 and 2019:
- In 2018, expenses are fully deductible in the year of payment.
- In 2019, the deduction is calculated as the average of expenses paid in 2018 and 2019.
Incompatibility with other tax benefits
Work expenses cannot be deducted from property income if already used to claim tax reductions, such as:
- "Malraux": for renovating properties in protected areas.
- "Duflot/Pinel": for investments in moderate-rent housing.
- Tourist residences: incentives for properties intended for tourism.