Para-Hotelier: Boost Your French Property Investment and Maximise Tax Benefits
[Updated: 27th January 2025]
Joining the Para-Hotelier scheme in France offers a profitable chance to tap into the thriving tourism market and enjoy significant tax advantages. Here's a comprehensive guide to kickstarting your venture and optimising your investment:Table of Contents
- Understanding Para-Hotelier and Its Exclusive Benefits
- Tax Incentives Overview
- Conditions for Benefit Eligibility
- Personal Enjoyment and Investment Synergy
- Rise in Popularity of Short-Term Rentals in France
- Clarifying Para-Hotelier vs. LMNP
- Final Considerations and Next Steps
- Seek Expert Advice: How We Can Help
- FAQs
Understanding Para-Hotelier and Its Exclusive Benefits
Since the 1960s, the French government actively supported its tourism industry, making it a cornerstone of the nation's economy, evident in platforms like Airbnb. France stands as one of the top destinations in the world for short-term rentals, making investing in French real estate increasingly attractive. Para-Hotelier, also known as Parahôtellerie, incentivises property investment in France, exclusively applying to newly built properties. This scheme offers investors a unique opportunity to leverage modern accommodations and attract discerning guests.Tax Incentives Overview
VAT Rebate
Participants receive a 20% VAT rebate upon purchasing a new property. To maintain this rebate, the property must be rented for short-term holiday lets for a minimum of 20 years. Failure to meet this requirement necessitates repayment of half the VAT rebate on a prorated basis if the property is rented for only 10 years. However, if the property is sold to a new owner willing to continue renting, VAT repayment is waived.Income Tax Exemption
Participants can offset 80% of the property's purchase price as depreciation over 20 to 30 years, effectively eliminating French income tax liabilities. Combining this strategy with allowable deductions such as mortgage interest ensures a tax-efficient rental income stream.Non-Resident Tax Implications
While rental income must be declared in the owner's home country, there are high tax efficiencies. For instance, in the UK, expenses can be fully offset against rental income, offering significant tax benefits compared to long-term buy-to-let properties.Purchasing Through a French Company
Buyers can strategically purchase property through a French company to potentially mitigate tax liabilities in their home country. Establishing a French company mandates involving an accountant to ensure compliance with French tax regulations, maximising tax efficiency for investors. We can help you set this up through our network of experienced and professional accountants.Conditions for Benefit Eligibility
To qualify for these generous tax breaks, participants must provide at least 3 out of 4 designated services to guests, ensuring a luxurious experience similar to upscale hotels:- Concierge Service or Key Handover
- Cleaning Service (2 weekly cleanings)
- Breakfast Provision
- Linen and Towel Supplies
Personal Enjoyment and Investment Synergy
One of the unique perks of Para-Hotelier properties is the flexibility for owners to use the property for personal enjoyment. Imagine having a stunning residence in the French Alps or on the French Riviera that you can share with loved ones whenever you desire, creating unforgettable memories in your own slice of paradise.
Rise in Popularity of Short-Term Rentals in France
According to Search Logistics, France is the second biggest country by Airbnb gross revenue, generating $4.56 billion. France also experienced significant growth from 2020 to 2021, with a revenue growth rate of 76.4%. This underscores the immense potential for property management businesses leveraging schemes like Para-Hotelier to achieve substantial return on investment (ROI), particularly in regions such as the French Alps and French Riviera, which have seen a significant increase in demand for short-term rentals.
Clarifying Para-Hotelier vs. LMNP
It's crucial to differentiate Para-Hotelier from LMNP (French Leaseback). While LMNP typically applies to commercial properties like hotel rooms or student accommodations, Para-Hotelier targets individual residential properties, offering distinct advantages and investment opportunities.Final Considerations and Next Steps
Participating in the Para-Hotelier scheme in France offers an enticing opportunity to capitalise on the nation's vibrant tourism industry while reaping significant tax advantages. By comprehending the scheme's nuances, meeting eligibility requirements, and seeking expert guidance, you can embark on a successful property investment journey. Utilise platforms such as Airbnb to provide travellers with unforgettable experiences while optimising your property for long-term profitability.Seek Expert Advice: How We Can Help
Unlocking the benefits of the Para-Hotelier scheme involves strategic planning and expert guidance. At Worldwide Property Co., we provide a comprehensive suite of services to streamline your property investment:
- Connect with Letting Agents: Access a network of professionals well-versed in Para-Hotelier requirements. They’ll offer personalized property lists tailored to your investment goals.
- Tax Optimisation with French Accountants: Benefit from tailored advice from experienced accountants, helping you maximize returns while ensuring compliance.
- Mortgage Assistance: Secure the best mortgage rates with bilingual support throughout the process, making applications straightforward and efficient.
- Comprehensive Insurance Solutions: Get assistance arranging life, building, contents, and medical insurance policies, all tailored to your property's specific needs.
- Furniture and Interior Design Experts: Elevate your property's appeal with access to furnishing deals and expert interior design, creating a standout experience for guests.
- Property Management Services: Ensure your property is well-maintained and consistently generates rental income with the help of trusted property management specialists.
Sources: fiscalonline.com | searchlogistics.com
