Phase 6 · Year-End Closing and Taxation

Report on an actual basis

You deduct your actual expenses and depreciate the property, but this involves bookkeeping and professional fees.

The “real” tax system is the one that matters to property owners: each expense is deducted at its exact amount, and, most importantly, the property itself becomes an expense through depreciation. This is the mechanism that explains why so many landlords of furnished rentals pay no tax on their rental income for years.

This page explains the principle behind depreciation, the key mechanism involved, what to consider in practice, and the relevant provision of the 2025 Finance Act that you should be aware of before making a decision.

Landmark

Since the passage of the 2025 Finance Act, deducted depreciation is now included in the calculation of capital gains upon resale. The tax benefit of the “actual” method is therefore no longer permanent: it is partially deferred. This trade-off should be discussed with a tax advisor before choosing a tax regime.

The Principle

You maintain a full set of business financial statements: balance sheet, income statement, and tax return. Taxable income is calculated as revenue minus actual expenses and depreciation.

Depreciation: The Decisive Mechanism

Assets (excluding land) and furniture are depreciated for accounting purposes each year. This depreciation is a deductible expense that does not result in any cash outflow: this is what allows, in many situations, for the generation of net taxable income for years. Depreciation cannot create a tax loss: any excess amount can be carried forward to subsequent fiscal years without any time limit.

What to Expect

A certified public accountant or an online accounting service that specializes in furnished rentals.
The systematic retention of all supporting documents.
One thing to keep in mind: the tax return needs to be prepared in advance; you can't just put it together on the fly in May.

Good to Know

Accounting fees are themselves tax-deductible: the actual cost of the plan is lower than it seems.

The Mistake to Avoid

Choose reality as a test. The transition from reality to the micro level is guided: the choice is made rationally beforehand, with the numbers in hand, not after the fact.

Points to Watch For

Depreciation never results in a deficit. Any excess amount is carried forward to subsequent fiscal years indefinitely: nothing is lost.
It all comes down to the supporting documents. The list of deductible expenses and the record-keeping requirements are detailed on page 6.4.
The annual summary provides the information related to operations. The rest—loans, co-ownership, and property tax—comes from your own documents.

Warning

You can't just throw together your tax return in May: Start gathering your documents at the beginning of the fiscal year, not as the deadline approaches.

Frequently Asked Questions

Why is reality often more favorable?

Because of depreciation: a tax-deductible expense that does not result in a cash outflow, which often offsets the tax on rental income for years.

What changes does the 2025 Budget Act bring?

Depreciation deductions are added back when calculating the capital gain upon resale: the gain is realized immediately, while the tax liability is partially deferred. It’s worth seeking advice on this matter.

Do I need an accountant?

In practice, yes, or a specialized online accounting service. Their fees are tax-deductible, which reduces the actual cost of the plan.

Can I go back on the air if reality doesn't suit me?

The passage is highlighted: do not choose "real" as an option. First, compare the two systems using the method described on page 2.5.