Lending Your Secondary Residence on Airbnb Legally

Summary

Renting out your second home on Airbnb is an excellent way to generate additional income. However, it is essential to comply with legal rules to avoid any legal issues. Follow these steps to rent legally and legitimately.

Mandatory registration in certain municipalities

Mandatory registration is a procedure implemented in several French municipalities to better control and regulate seasonal rentals. If you own a second residence you wish to rent on platforms like Airbnb, it is crucial to know whether your city mandates this process. This registration system was established to prevent market saturation of short-term rentals and ensure that tourist accommodations do not encroach on housing for permanent residents.

Why is registration mandatory?

Some cities, especially those with over 200,000 inhabitants, such as Paris, Lyon, or Bordeaux, as well as so-called “tight” zones, have made registration compulsory for tourist furnished rentals. This allows municipalities to monitor and limit the impact of short-term rentals on the local housing market. Registering your property contributes to a more equitable management of the housing stock by enabling authorities to better control the availability of long-term housing for residents.

How to obtain a registration number?

Getting a registration number is generally a simple and quick procedure. Here are the usual steps:

1. Access your town hall’s website or visit the local office to request it.
2. Fill out the online registration form, which will ask for information about your property (address, property type, number of bedrooms, etc.).
3. Submit your request, often free of charge. Some municipalities may require additional documents, such as proof of ownership or insurance.
4. Receive a unique registration number to include in your rental ad on Airbnb or other platforms.

This number must be clearly visible on your online rental listing. It enables local authorities to verify your compliance with tourist rental regulations.

Which cities are affected?

Cities subject to mandatory registration include major metropolitan areas and zones with high real estate pressure, known as tight zones. Here are some cities where registration is obligatory:

• Paris
• Lyon
• Nice
• Bordeaux
• Marseille
• Lille

Other less significant municipalities may also have introduced this requirement. To determine if your city is affected, it is recommended to consult the official municipal website or the public service site.

Advantages of registration

1. Legal security: By complying with this obligation, you avoid sanctions that can reach up to 5,000 euros in fines.
2. Tenant trust: A registration number reassures potential travelers, who will know that your property complies with local rules regarding tourist rentals.
3. Administrative simplicity: This process allows you to manage your rental activity peacefully without risking illegal status.

What are the penalties for not registering?

Failing to register your second residence in a municipality where it is mandatory can lead to significant penalties. Authorities may not only impose a fine of up to 5,000 euros but also request the suspension of your listings on rental platforms. For example, Airbnb can remove your ad if you do not provide a valid registration number where required.

Change of use to rent for more than 120 days

In certain large cities like Paris or Lyon, renting out a second home for more than 120 days annually on platforms like Airbnb requires a change of use. This process is crucial for owners seeking to maximize revenue while respecting local regulations. The change of use involves transforming your property from a residential to a commercial use, which is mandatory in many high-tourism-density cities.

Why is a change of use necessary?

The change of use is imposed in cities where the demand for housing exceeds supply, to protect the residential rental market. Indeed, the increase in short-term rentals in these areas has led to a decrease in available housing for permanent residents. Municipalities have thus introduced this measure to regulate the market and ensure a balance between tourism activity and residents’ housing needs.

How to carry out a change of use?

The process for changing use may vary from city to city, but here are the main steps:

1. Request authorization from the municipal office: You must submit an official request to convert your residential property into a commercial space. This request can often be made online, although some cities may require a more formal procedure.
2. Provide additional documents: You will need to supply detailed information about your property, including its surface area and current use. The city hall may also request proof that the property will be used exclusively as a tourist furnished rental.
3. Obtain approval from the city hall: Once your application is complete, the city hall will analyze it based on the city’s situation, particularly regarding housing pressure. If approved, you will receive a permit allowing you to rent your property for more than 120 days.

Compensation of square meters

In some cities like Paris and Lyon, changing use is accompanied by a compensation requirement. This system obliges owners to compensate for the lost meters of living space by adding an equivalent living surface in the city.
Here’s how it works:

• Mandatory compensation: If you convert a residential apartment into a tourist furnished rental, you must offset this loss by purchasing or transforming another commercial property into residential housing. For example, if you convert a 50m² apartment, you will need to acquire or convert an equivalent commercial space into residential.
• Strict regulation: This system is implemented to prevent a housing shortage accessible to local residents. This rule is especially enforced in areas where the real estate market is under high pressure, such as in Paris or parts of Lyon.

Which cities require the change of use and compensation?

The change of use with compensation is mainly applied in large cities and tight zones where demand exceeds supply. Among affected cities are:

• Paris: The city imposes strict compensation rules for all properties converted into tourist furnished rentals.
• Lyon: Lyon has also implemented compensation measures, especially for properties over 60m².
• Bordeaux: Although the city enforces change of use rules, it does not always require compensation, unlike Paris.
• Marseille: Marseille does not yet impose compensation, but change of use is required in certain parts of the city.

Penalties for non-compliance

If you rent out your second home for more than 120 days without a change of use, you risk significant penalties. These can include fines up to 50,000 euros, and the city hall may demand the restoration of the property to residential use. Additionally, platforms like Airbnb might suspend or remove your listing if you do not comply with local regulations.

Declaration at the town hall: a crucial step

Even if your city does not require a change of use, declaration at the town hall remains a mandatory step for all property owners wishing to rent their second home on Airbnb or any short-term rental platform. This process aims to regulate tourist rentals and guarantee transparency with local authorities. It is essential to stay in compliance with the law.

Why declare at the town hall?

Declaration at the town hall is a control measure introduced by the government to register properties intended for tourist rentals. It allows municipalities to monitor the rental market’s evolution and better manage the presence of seasonal accommodations in their jurisdiction. Moreover, this declaration helps prevent abuses, such as mass conversion of housing into tourist furnished rentals in areas where residential housing is already under pressure.

Who is affected by this obligation?

All owners of a second home who wish to rent their property to tourists must undertake this process. Whether your property is in a small town or a large city, declaration at the town hall is required once you offer short-term rentals. Even if a change of use is not necessary, the declaration must still be made.

How to declare at the town hall?

The declaration process at the town hall is generally simple and quick. Here are the steps to ensure compliance:

1. Access your town hall’s website: Many municipalities offer the possibility to do this online. You just need to visit the town’s website where your property is located and follow the instructions for tourist furnished rentals.
2. Fill out the declaration form: This form will ask for basic information about your second home (address, surface area, number of rooms, etc.), as well as your intended use (short-term rental).
3. Submit the declaration: Once the form is filled out, you can submit it directly online or, in some cases, print and send it by mail to the city hall. Some municipalities may also request additional documents, such as proof of ownership or an insurance certificate.
4. Receive a registration number (if applicable): In some large cities, once your declaration is validated, you will receive a unique registration number, which must be displayed on your rental listing on Airbnb or other platforms.

What are the sanctions for non-declaration?

Failing to comply with this declaration requirement can lead to significant sanctions. Local authorities may impose a fine of up to 5,000 euros. This fine aims to encourage owners to respect regulations and declare their rentals. Additionally, platforms like Airbnb may suspend or delete your listing if they do not have your declaration number when required.

Benefits of making this declaration

1. Legal security: By filing this declaration, you are protected against potential inspections or sanctions by local authorities.
2. Tenant confidence: Travelers will be reassured knowing your rental is legal and compliant with local requirements. A registered property is often perceived as safer and more professional.
3. Administrative simplicity: Although it may seem like an additional formalities, this process is simple and shields you from legal issues related to short-term rentals.

Taxation and income reporting for rentals

Income generated from renting your second home on platforms like Airbnb is subject to specific tax rules. These earnings are considered Industrial and Commercial Profits (BIC), a regime specific to furnished rentals. It is important to understand these rules to properly declare your income and optimize your taxation while complying with legislation.

Applicable tax regime: micro-BIC or actual regime

You have two tax regimes to declare your rental income: the micro-BIC or the actual regime. Each has its advantages and depends on your annual rental income.

1. Micro-BIC regime:
   • This regime is the simplest and is often chosen by owners generating modest income from renting their second home.
   • You benefit from a 50% flat-rate deduction on your rental income, meaning only 50% of your receipts are taxed.
   • This regime applies if your rental income is below 77,700 euros per year.
   • Example: If you earn 30,000 euros in annual rental income, you will be taxed only on 15,000 euros after the deduction.
2. Actual regime:
   • This regime is mandatory if your rental income exceeds 77,700 euros per year, but you can also choose it below that threshold if you have significant deductible expenses (interest on loans, maintenance costs, work, etc.).
   • With the actual regime, you can deduct all your actual charges related to the property’s operation (management fees, co-ownership charges, work, etc.).
   • This regime can be more advantageous for those with high expenses related to their property, as it reduces the taxable base.

Social contributions on rental income

In addition to income tax, owners earning more than 23,000 euros in rental income annually are subject to social contributions. These contributions are levied at a rate of 17.2% on your taxable income after applying the deduction or allowances.
Here’s how it works:

• If your rental income is below 23,000 euros: You are not subject to social contributions, and you are considered a Non-Professional Furnished Landlord (LMNP).
• If your rental income exceeds 23,000 euros: You must declare this income with the URSSAF and pay social contributions. You then become a Professional Furnished Landlord (LMP), with additional tax obligations.

Tourist tax and other local taxes

Besides income tax and social contributions, you may need to collect the tourist tax. This tax is paid by tenants and must be remitted to the municipality where your property is located. In some large cities, such as Paris or Lyon, Airbnb automatically collects the tourist tax for you. However, if you use other platforms or if your property is in a smaller municipality, you must collect and remit this tax yourself.

Concrete tax example

• If you rent out your second home and your annual income reaches 40,000 euros:
  • Under the micro-BIC regime, you benefit from a 50% deduction, thus taxed on 20,000 euros.
  • If you have significant deductible expenses (work, interest on loans, etc.), the actual regime may be more advantageous, as it can further reduce your taxable income.
  • If your rental income exceeds 23,000 euros, you must also pay 17.2% social contributions on the taxable share of your income.

Choosing the right tax regime

The choice between the micro-BIC and actual regime will mainly depend on your rental income and expenses. If you have high costs related to managing your property, the actual regime may be more advantageous. Conversely, if your income is modest and your charges are low, the micro-BIC regime is simpler and is automatically applied if you do not exceed the threshold of 77,700 euros.

Opting for the mobility lease for greater flexibility

The mobility lease is an ideal solution for owners wishing to rent their second home over an intermediate period without the constraints of seasonal rentals. This lease type is aimed at students, interns, or temporary workers, and offers great flexibility for rentals from 1 to 10 months. It is an interesting option to maintain a steady income while avoiding more stringent regulations applied to short-term rentals.

What is the mobility lease?

The mobility lease was created by the ELAN law in 2018 to provide a flexible solution for people with short-term housing needs, such as:

• Students in training or internships,
• Workers on business trips or short missions,
• Persons undergoing career reconversion.

It is a furnished rental contract with a limited duration, not exceeding 10 months and non-renewable. This lease has no security deposit, which makes it particularly attractive for temporary tenants.

Advantages of the mobility lease for owners

1. Flexibility: The main advantage of the mobility lease is its flexibility. Unlike traditional seasonal rentals, you are not limited to a maximum rental period of 120 days. You can rent your property for longer periods while being able to recover it quickly after the lease ends.
2. No long-term commitment: This type of lease allows you to rent out your second home without a long-term commitment. You can reclaim your property once the 1 to 10 months period concludes, without waiting for the end of a traditional 3-year lease.
3. Stable income: Although the mobility lease does not permit as rapid a rotation of tenants as seasonal rentals, it guarantees a steady rental income over several months, which is ideal to cover your expenses (taxes, maintenance, etc.).
4. Open rent: Unlike some long-term rentals where rent can be capped in high-demand zones, the rent for a mobility lease is free, allowing you to set competitive rates based on demand and location.

Owner obligations

Even though the mobility lease is more flexible, certain obligations must be respected as an owner. Here are the main rules:

1. Furnished accommodation: The mobility lease is furnished, meaning your second home must be equipped with sufficient furniture to allow the tenant to live comfortably. This includes essential furniture like a bed, kitchen appliances, and basic everyday items.
2. Lease duration: The lease term must be between 1 month and 10 months. Once this period ends, the lease cannot be renewed or extended. If you wish to rent again to the same tenant, you will need to conclude a new type of contract, but not another mobility lease.
3. Specific tenant: This lease is only for certain categories of people, such as students, workers on missions, or interns. You must ensure that your tenant meets these conditions to be eligible for the mobility lease.

Why choose the mobility lease?

The mobility lease is an excellent alternative for owners who want to avoid legal restrictions related to tourist rentals. Indeed, in cities like Paris or Lyon, tourist rentals are limited to 120 days per year for primary residences or require complex administrative procedures for second homes. With the mobility lease, these constraints are bypassed, as you stay within a simpler legal framework, without needing a change of use or compensation of square meters.

Example of using the mobility lease

Suppose you own a second residence in Bordeaux. You do not want to rent it out for short periods during the low tourist season but still want to generate income. You can opt for a mobility lease with a master’s student or a young professional on a temporary mission in the city. This tenant will occupy your property for 6 months, helping cover your expenses while allowing you to recover your property at the end of the agreed period, with no complications.

Conclusion

Rent your second home on Airbnb is an ideal solution to monetize your property, provided you follow local and national rules. By respecting registration and declaration procedures, you can rent your property peacefully and maximize your rental income.

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