Para-Hotelier: Boost Your French Property Investment and Maximise Tax Benefits

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

 

Falcon Lodge - Meribel - Eligible For Para-Hotelier

 

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.

 

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
  • Breakfast Provision
  • Linen and Towel Supplies
 

Para-Hotelier concierge

 

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.

 

Para-hotelier family enjoying chalet

 

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.

Ensure your French property investment shines while maximising tax benefits – unlocking the full potential of France's lucrative real estate market.

 

Seek Expert Advice: How We Can Help

Navigating the intricacies of Para-Hotelier and maximising its benefits requires expert advice. At Worldwide Property Co we offer a comprehensive range of services to support your property investment journey:
 
  • Connect with Experienced Letting Agents: Gain access to professionals proficient in Para-Hotelier requirements, providing personalised property lists tailored to your needs and budget.
  • Introduce to French Accountants: Receive tailored tax optimisation guidance from experienced French accountants, ensuring compliance and maximising returns.
  • Assist with Mortgage Processing: Navigate mortgage applications with ease, securing the best rates available and receiving bilingual support throughout the process.
  • Arrange Insurance Policies: Ensure comprehensive coverage with assistance in arranging life, building, contents, and medical insurance policies tailored to your property investment.
  • Access Furniture Procurement Specialists and Interior Designers: Tap into our network of specialists for furnishing deals and expert interior design services, ensuring your property stands out and attracts guests.
  • Connect with Property Management Services: Be introduced to trusted property management companies specialising in short-term rentals, ensuring your property is well-maintained and maximising rental income potential.
 
Unlock the full potential of French real estate with Worldwide Property Co. Contact us today for a FREE consultation.

Disclaimer: This guide provides informational content and not financial, legal, or tax advice. Readers should consult with qualified professionals for personalised adivce.

  Sources: fiscalonline.com | searchlogistics.com

 

FAQs

What is Para-Hotelier?
Para-Hotelier, also known as Parahôtellerie, is a government scheme in France designed to incentivise property investment by offering tax benefits to individuals who rent out their newly built residential properties to short-term holidaymakers.

Who is eligible to participate in the Para-Hotelier scheme?
The Para-Hotelier scheme is available to both French residents and non-residents who own residential properties in France. There are no restrictions based on nationality, but the property must be newly built and rented out to short-term holidaymakers for at least 20 years to qualify for tax benefits.

What are the tax benefits of Para-Hotelier?
The tax benefits of Para-Hotelier include a VAT rebate of 20% upon purchasing a new property, income tax exemption on rental income by offsetting depreciation, and international tax implications that allow for tax-efficient rental income declaration in the owner's home country.

Can I use my Para-Hotelier property for personal use?
Yes, owners can share their property with loved ones and use it as a vacation home while still benefiting from tax advantages.

What is TVA in France?
TVA, or Taxe sur la Valeur Ajoutée, is the French equivalent of Value Added Tax (VAT) applied to goods and services. In the context of property investment, it refers to the VAT rebate offered under the Para-Hotelier scheme.