Rental bookkeeping: keep the year, don't rebuild it in April

There are two ways to declare rental income. The first is to open, on a Sunday in April, a shoebox full of managing-agent statements, service-charge demands and tradesmen's invoices, then reconstruct twelve months in the life of a property you have spent the year not looking at. The second is to have nothing to reconstruct.

The gap between the two is not measured in lost hours — though those run into dozens. It is measured in errors: a rent from a tenant who left in July credited to the next one, a service-charge provision deducted twice, works you can no longer tie to a contractor or a date. Each of those has a tax consequence, and none of them is visible at the moment you make it.

This article sets out what the declaration really asks for, and why what it asks for is collected as you go or not at all.

This article describes the French regime for rental income (revenus fonciers) and its form 2044. The bookkeeping discipline it describes travels; the tax rules do not.

What form 2044 actually asks for

Declaring rental income under the actual-expenses regime does not ask for a total. It asks for a breakdown, line by line: gross rent received, repairs and maintenance, service-charge provisions, property tax, insurance premiums, management fees, loan interest — each in its own place, and loan interest in a place very much of its own, outside the total of the other expenses.

Above all it asks for something few landlords anticipate: a supporting schedule. For works, the official guidance requires the nature of the expense, the name and address of the contractor, the payment date and the amount. For loans, the lender's identity, the purpose of the loan, its start date and the capital borrowed. This is exactly what you will be asked for again in an audit two or three years later — that is, at precisely the moment when nobody can find March's plumbing invoice.

None of this is difficult. All of it is simply impossible to reconstruct from memory.

Rent demanded is not rent received

Rental income is taxed on a cash basis. Rent demanded but never paid is not taxable income — nor is it a deductible expense: for tax purposes it does not exist. The rule is easy to state and brutal to apply, because it forces you to separate, month by month, what was owed from what landed in the account.

Three traps come up every time.

The changeover month. When one tenant leaves in July and another moves in in August, the year's receipts belong to two distinct leases. Adding all twelve months on a single line gives a correct total and a wrong allocation — until one of the two asks for an adjustment.

Pro-rating the first and last month. The opening and closing months of a lease are pro-rated. Two conventions coexist in the trade: actual days in the month, and thirtieths. They do not produce the same figure, and some managing agents use one on the way in and the other on the way out — on the same statement. The gap is a few euros; it is enough to raise an arrear that does not exist.

The current month. Rent is payable in advance. By the 20th, the current month is owed, and not seeing it arrive is precisely the information a landlord came for. Waiting for month end to worry about it means discovering a delay three weeks late.

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Service charges: the timing nobody anticipates

This is where landlords in a copropriété (the French commonhold structure, run by a managing agent) go wrong most often, and there is nothing intuitive about it.

In year N you deduct all the service-charge provisions paid to the managing agent. You deduct them before knowing which were deductible, because the annual reconciliation only arrives the following year.

In year N+1, when the statement finally lands, you add back the share of the year-N provisions that turned out not to be deductible: the part recoverable from the tenant, the part not deductible by nature, and the reconciliation balance.

The official guidance gives the worked example: out of €1,200 of provisions called, €800 deductible, €200 non-deductible, €180 recoverable from the tenant and a €20 balance, €400 must be added back the following year.

Two practical consequences. First, you need last year's managing-agent statement to file this year's return — a document that often arrives after the return you would naturally associate it with. Second, a landlord who deducts provisions and never makes the add-back builds up, year after year, a silent gap against what should have been declared.

The rental result is computed across everything, not property by property

This is the most expensive mistake, and the easiest one to make when you keep a spreadsheet per property.

The tax authority does not read your properties separately. It adds up all rental income, subtracts all expenses, and the overall result is what counts. Three consequences follow:

• a loss-making property offsets a profitable one; computing property by property overstates the tax on one without seeing the saving on the other;
• the cap on offsetting a rental loss against general income — €10,700 — applies once, not once per property;
• above that cap, and for the part of the loss arising from loan interest, the loss is not lost: it carries forward against future rental income, for up to ten years. Which means keeping the running total from one year to the next — a multi-year record, not an April calculation.

The regime also changes the calculation upstream. Below €15,000 of gross annual rent, the micro-foncier regime applies a flat 30% allowance and closes the door on any actual deduction — including any loss. Above it, the actual-expenses regime applies. In between it is a choice, and a binding one: electing the actual regime commits you for three years. Thresholds and allowances should be checked each year; they are not set in stone.

The method: twelve small acts rather than one large one

None of the above requires expertise. It requires regularity — and regularity is exactly what a portfolio looked at twice a year does not have.

Record on receipt, month by month. Rent that arrives is logged when it arrives, tied to its unit and its lease. That is five minutes a month, and it removes the entire reconstruction job.

File the expense when you pay it. A works invoice carries its nature, its contractor, its date and its amount on the day you settle it. Six months later, often only the amount survives — and that is precisely the one of the four the schedule cannot be built from.

Handle the managing-agent statement the day it arrives. It drives next year's add-back; left on a pile, it will be forgotten.

Look at arrears during the month, not at year end. A delay spotted in February gets chased; the same delay discovered in April of the following year merely gets recorded.

This is bookkeeping in the strict sense. Nothing intellectually hard — and nothing anyone sustains by hand, which is what the shoebox is for.

And the rest of the portfolio

A rental property is not an isolated object: it weighs on your net worth, net of the loan, and its value moves independently of its rent. Keeping that up to date is a separate exercise, with its own sources.

The two answer each other: rent says what the property produces, value says what it represents, and their ratio gives the real return. As for tax, it is not read in isolation either: rental income adds to the rest of your income, and our article on wealth taxation in France puts each wrapper back in the whole.

Conclusion

Declaring rental income is not a hard exercise. It is an exercise in memory, and memory is the one thing a landlord cannot improvise in April.

Three rules change the nature of the problem: record on receipt rather than on demand, deal with each document the moment it arrives, and compute the rental result across all properties rather than one at a time. The rest — the cap, the carried-forward loss, the provision add-back — becomes arithmetic on data that is already clean.

It is not tax that is expensive for a disorganised landlord. It is what they can no longer find.

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This article is for information only and constitutes neither investment nor tax advice. The thresholds, caps and rules cited change — check those of the year concerned. For your own situation, an accountant or a wealth adviser is the right person to ask.