Rental property : why it is necessary to defer some work to 2020

The entry into force of the withholding at the source disrupts the functioning of some devices tax. Some of the donors have an interest to see their big building.

In normal times, the French tax has already some subtle complexities. But with the introduction of the levy at source, (NOT), it has taken a new direction. In this respect, 2019 is a year of transition, fraught with pitfalls. The warning applies in particular to some owners, landlords of dwellings to be naked, taxed on their property income. If they have opted for the regime of so-called "real", which allows them to deduct all their expenses to lower their tax, they may become disillusioned in the event that they would undertake heavy work this year. Accuracy : the furnished rentals are not concerned.

work rental taken into account in the amount of 50% by 2019

Effect of withholding at the source, in order to avoid double taxation of the donor in 2019, the property income, - current, collected in 2018, will be "erased" by the tax credit for the modernization of the recovery (CIMR). "In return, the work 2019 the so-called 'controllable', that is to say, the work of repair, maintenance and improvement of the rented dwellings, are partially deductible from property income, 2019. They will declare in 2020 for an amount equal to 50 % of the expenses incurred in 2018 and 2019, compared with 100 % usually," warns Valerie Bentz, head of studies the heritage of the Union financière de France (UFF).

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For Me Natacha Le Quintrec, tax lawyer in Paris, except emergency work, so it is best to postpone the realization of big projects (renovation, re-roofing, changing windows, etc...) to 2020, in order not to be penalized.

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exceptions to the rule...

Some of the work rental remain deductible to the extent of 100 % : the work "emergency", that the taxpayer must undertake, coerced and sometimes forced, to deal with exceptional circumstances. And repairs on a roof due to a storm, the replacement of a security door after a burglary, a crucial piece of equipment to rent (boiler...) in case of breakdown, emergency works to be undertaken upon order of the city council, of the justice or on the initiative of the trustee.

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are subject also to this system of derogation to the investors, who perform work on a property acquired in 2019, on a listed building or registered in 2019 as a historical monument, or yet, having received it in 2019 on the label issued by the heritage Foundation.

These donors have no hesitation to have : they can undertake their work without delay. "However, says Valerie Bentz, the other donors who are considering expensive work but not essential for the rental of interest to reschedule for 2020." Each situation that requires a customized answer, in order to decide in full knowledge of the facts, it is better to consult a specialist honed the intricacies of the tax system.

Do not get the wrong priority

Note, by the way, not to think only in terms of tax. Because of the deferral of work after the departure of a tenant may lead to difficulties of relocation and increase the period of vacancy in rental properties. The tax benefit expected is likely to be outweighed by the loss of rents.

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Some donors may therefore be tempted to offer their tenant a rebate of rent, subject to the execution of works. This practice is common, but fiscally dangerous. "In the case of control, the owner is liable to a recovery with penalties," warns Me Natacha Le Quintrec. The remedy is then worse than the evil.