Rental income: removal of the flat-rate deduction and micro-foncier allowance cut from 40% to 30%

As part of the income tax reform, Article 76 of the 2006 Finance Act (Article 60 of the bill) adjusts the taxation of rental income to the integration of the 20% allowance into the tax scale. Under the actual-expenses regime, the 14% flat-rate deduction is removed; management costs are allowed at a flat €20 per unit, and insurance premiums, legal costs and management fees paid to third parties become deductible at their actual amount. Under the simplified micro-foncier regime, the flat allowance falls from 40% to 30%. These provisions apply from the taxation of 2006 income, assessed in 2007. The 30% micro-foncier allowance is still in force (Article 32 of the General Tax Code).