Which charges are liable to a deduction for the Land Income Tax (hereinafter LIT)? When is the deficit considered for the income tax? Are those charges considered after the threshold value of 10.700 EUR?
The following reasoning is based on the article 31 of the Code Général des Impots (Tax Code).
Charges liable for a deduction.
The fees and charges considered for the deduction:
- Reparation and maintaining or improvement.
- The fees required from the renter but paid by the owner.
- Provisions for the co-ownership fees.
- Management fees and loan interest.
- This list is not exhaustive.
Deduction of the deficit and the relationship with the income tax.
If the difference between the benefits and the charges shows a deficit then it is deductible from the income tax if the landowner rent it for at least 3 years (ending December, the 31st).
However, a threshold set at 10.700 EUR is the maximum allowed for a deduction, but this threshold is increased to 21.400 EUR when the works done is related to energic efficiency.
Over this sum, the deficit can be deductible the next financial years and for 10 years after that. If the income tax is not high enough to overtake the deficit, then the deficit can be deductible for 6 years.
