In the field of rental investment, there are various statuses. What is LMNP status? What are the advantages of the latter? What do you need to know about taxation? We answer all of these questions.

What is the LMNP?

Non-Professional Furnished Rental is a status that offers the possibility of “generate asset income from rents that become non-taxable”. It concerns housing rented as a main or seasonal or temporary residence.
To differentiate a professional furnished rental company (LMP) from a non-professional furnished rental company (LMNP), you should know that the former:

• has at least one member of the tax household registered in the Trade and Companies Register as a professional lessor;
• Thanks to this activity and for all the people in the household, annual revenues in excess of 23,000 euros over the calendar year. In addition, these revenues must be greater than the revenues. “of the fiscal household subject to income tax in the categories of salaries and wages, industrial and commercial profits (other than those derived from the furnished rental business), agricultural profits and non-commercial profits”.

If even one of these conditions is not met, it is called LMNP status.
As part of a rental investment in a student, medical, tourist or business residence, it is possible to recover 20% VAT. In short, if the property costs 200,000 euros, you actually “only” pay 160,000 euros for it.

Steps to take for LMNPs

Do you want to start non-professional furnished rentals? You must register with the registry of the Commercial Court on which the property concerned depends. You have 15 days from the start date of the rental to fill out the Cerfa 11921 form. If you register for several furnished rentals, the registry of the competent Commercial Court will be that of the location of one of the properties or that of the place of the main activity.
Then you will get a SIRET number. You can also indicate the tax regime you have chosen.

LMNP status and taxation regime

LMNPs have the choice between two taxation regimes: micro-BIC or real regime. Your choice will mainly depend on your rental income.
The micro-BIC thus concerns LMNPs whose revenues do not exceed 70,000 euros. A 50% reduction on revenue is applied. This means that only half of the rental income is taxable. It is an interesting regime if your expenses are less than taxable income.
If you earn more than 70,000 euros in revenue, the actual regime is automatically applied (below this ceiling, you must apply to the tax authorities to benefit from this tax regime). Under the real regime, expenses (works, taxes, loan interests, etc.) are deducted from revenue. For example, if your rents earn you 7,500 euros per year and you have 1,000 euros in expenses and 2,500 euros in loan interest, you are not taxed on the 7,500 euros, but on 4,000 euros (7,500 — 1,000 — 2,500 = 4,000).
With LMNP status, you can also depreciate (which can be postponed indefinitely), but you cannot then create a land deficit.
If a land deficit exists, it is carried over to rental income in subsequent years.
Have you ever heard of the Censi-Bouvard law? Elle “allows French taxpayers who make a real estate investment in new homes in furnished homes to directly reduce their tax by a percentage of the cost price of the apartment and to recover VAT on the amount of the investment. It complements the status of the Non-Professional Furnished Rental Company, which uses the principle of depreciation to generate tax-exempt income.”. This is a tax reduction equal to 11% of the price of the property.

Benefits of LMNP status

The advantages of LMNP status are multiple. First, and as explained above, the steps to be taken are simple since all you have to do is register with the Commercial Court registry by first completing the dedicated Cerfa form.
In addition, it is a flexible status. If you want to end the rental to take over the property for your personal use, for example, you can do it whenever you want (while still respecting the conditions of the lease). There is therefore no minimum duration for non-professional furnished rentals.
Taxation is also a significant advantage since not only do you have the choice between two tax regimes, but you also benefit from significant allowances and deductions. In addition, you can postpone the land deficit for several years.
If you have opted for the real regime, note that depreciation has no impact on the calculation of capital gain. Another advantage of this status!
Who says furnished rental says property that can be immediately inhabited. A bed and a bedside table are therefore not enough for a home to be considered furnished. The tenant must be able to move in and live there without having to bring their own furniture. Thus, bedding (with duvet or blanket), stovetops, cooking utensils, oven, light fixtures or “household cleaning equipment adapted to the characteristics of the home” are part of the official list established by the State in “Decree No. 2015-981 of 31 July 2015 establishing the list of furniture elements in furnished housing”.
1-https://www.impots.gouv.fr/portail/particulier/les-locations-meublees + https://www.pap.fr/bailleur/choisir-investissement/la-fiscalite-immobiliere/a1247/loueur-en-meuble-non-professionnel-vos-avantages-fiscaux + https://www.loi-censi-bouvard.info/ + http://www.jedeclaremonmeuble.com/lmnp-les-6-avantages-du-statut-de-loueur-en-meuble-non-professionnel/

Rental investment: focus on LMNP status

In the field of rental investment, there are various statuses. What is LMNP status? What are the advantages of the latter? What do you need to know about taxation? We answer all of these questions.

What is the LMNP?

Non-Professional Furnished Rental is a status that offers the possibility of “generate asset income from rents that become non-taxable”. It concerns housing rented as a main or seasonal or temporary residence.
To differentiate a professional furnished rental company (LMP) from a non-professional furnished rental company (LMNP), you should know that the former:

• has at least one member of the tax household registered in the Trade and Companies Register as a professional lessor;
• Thanks to this activity and for all the people in the household, annual revenues in excess of 23,000 euros over the calendar year. In addition, these revenues must be greater than the revenues. “of the fiscal household subject to income tax in the categories of salaries and wages, industrial and commercial profits (other than those derived from the furnished rental business), agricultural profits and non-commercial profits”.

If even one of these conditions is not met, it is called LMNP status.
As part of a rental investment in a student, medical, tourist or business residence, it is possible to recover 20% VAT. In short, if the property costs 200,000 euros, you actually “only” pay 160,000 euros for it.

Steps to take for LMNPs

Do you want to start non-professional furnished rentals? You must register with the registry of the Commercial Court on which the property concerned depends. You have 15 days from the start date of the rental to fill out the Cerfa 11921 form. If you register for several furnished rentals, the registry of the competent Commercial Court will be that of the location of one of the properties or that of the place of the main activity.
Then you will get a SIRET number. You can also indicate the tax regime you have chosen.

LMNP status and taxation regime

LMNPs have the choice between two taxation regimes: micro-BIC or real regime. Your choice will mainly depend on your rental income.
The micro-BIC thus concerns LMNPs whose revenues do not exceed 70,000 euros. A 50% reduction on revenue is applied. This means that only half of the rental income is taxable. It is an interesting regime if your expenses are less than taxable income.
If you earn more than 70,000 euros in revenue, the actual regime is automatically applied (below this ceiling, you must apply to the tax authorities to benefit from this tax regime). Under the real regime, expenses (works, taxes, loan interests, etc.) are deducted from revenue. For example, if your rents earn you 7,500 euros per year and you have 1,000 euros in expenses and 2,500 euros in loan interest, you are not taxed on the 7,500 euros, but on 4,000 euros (7,500 — 1,000 — 2,500 = 4,000).
With LMNP status, you can also depreciate (which can be postponed indefinitely), but you cannot then create a land deficit.
If a land deficit exists, it is carried over to rental income in subsequent years.
Have you ever heard of the Censi-Bouvard law? Elle “allows French taxpayers who make a real estate investment in new homes in furnished homes to directly reduce their tax by a percentage of the cost price of the apartment and to recover VAT on the amount of the investment. It complements the status of the Non-Professional Furnished Rental Company, which uses the principle of depreciation to generate tax-exempt income.”. This is a tax reduction equal to 11% of the price of the property.

Benefits of LMNP status

The advantages of LMNP status are multiple. First, and as explained above, the steps to be taken are simple since all you have to do is register with the Commercial Court registry by first completing the dedicated Cerfa form.
In addition, it is a flexible status. If you want to end the rental to take over the property for your personal use, for example, you can do it whenever you want (while still respecting the conditions of the lease). There is therefore no minimum duration for non-professional furnished rentals.
Taxation is also a significant advantage since not only do you have the choice between two tax regimes, but you also benefit from significant allowances and deductions. In addition, you can postpone the land deficit for several years.
If you have opted for the real regime, note that depreciation has no impact on the calculation of capital gain. Another advantage of this status!
Who says furnished rental says property that can be immediately inhabited. A bed and a bedside table are therefore not enough for a home to be considered furnished. The tenant must be able to move in and live there without having to bring their own furniture. Thus, bedding (with duvet or blanket), stovetops, cooking utensils, oven, light fixtures or “household cleaning equipment adapted to the characteristics of the home” are part of the official list established by the State in “Decree No. 2015-981 of 31 July 2015 establishing the list of furniture elements in furnished housing”.
1-https://www.impots.gouv.fr/portail/particulier/les-locations-meublees + https://www.pap.fr/bailleur/choisir-investissement/la-fiscalite-immobiliere/a1247/loueur-en-meuble-non-professionnel-vos-avantages-fiscaux + https://www.loi-censi-bouvard.info/ + http://www.jedeclaremonmeuble.com/lmnp-les-6-avantages-du-statut-de-loueur-en-meuble-non-professionnel/