What is a Non-Professional Furnished Rental (LMNP)?
The Non-Professional Furnished Rental (LMNP) is a tax regime aimed at owners who wish to rent a furnished property while benefiting from tax advantages. This status applies if rental income does not exceed a certain ceiling.
Applicable Tax Regimes in LMNP
When choosing to rent a property under the Non-Professional Furnished Rental (LMNP) status, it is crucial to understand the available tax regimes. Indeed, taxation can significantly impact your net income. You have two options: micro-BIC and the actual regime. Each offers different advantages depending on your rental income and expenses.
The Micro-BIC Regime
The micro-BIC (Industrial and Commercial Profits) regime is available if your annual rental income is below €72,600. This regime is particularly attractive for owners with few deductible expenses. It offers a flat deduction of 50% on rental income, meaning you are taxed only on half of your receipts. This deduction covers all expenses and costs without requiring proof.
The main advantage of micro-BIC is its simplicity. You do not need to keep complex accounting or calculate actual expenses. This regime is ideal if your expenses do not exceed 50% of your rental income. However, it becomes less beneficial if your expenses are high, especially for extensive work or high-interest loans.
Note that if you exceed the €72,600 threshold, you will automatically switch to the actual regime, which is more suitable for investors with high expenses.
The Actual Regime
The actual regime is another tax scheme offered for non-professional furnished landlords. Unlike micro-BIC, it does not offer a flat deduction but allows deducting all actual expenses related to the rental activity. This regime becomes mandatory if your rental income exceeds €72,600, but you can also adopt it voluntarily if your expenses are above 50% of your receipts.
Under the actual regime, you can deduct various charges, such as:
- The loan interest contracted for purchasing the property,
- The management fees (e.g., agency fees, insurance),
- Maintenance and repair work,
- The property taxes,
- Condominium charges,
- And especially, the depreciation of the property and furniture, which constitutes a powerful tax lever. Depreciation involves deducting, each year, a part of the property’s and furniture’s value over a period of 20 to 30 years for real estate and 5 to 7 years for furniture.
This regime is thus more complex to manage because it requires strict bookkeeping and often the intervention of a chartered accountant to calculate depreciation and declare deductible charges. However, it is generally more advantageous than micro-BIC for owners with high expenses, as it significantly reduces taxable income.
Furthermore, with the actual regime, it is possible to generate a fiscal deficit, meaning that if your expenses exceed your rental income, you can carry forward these losses to future years, up to a maximum of ten years. This mechanism allows you to offset future profits and further reduce your taxation.
Steps to Declare an LMNP
To declare a Non-Professional Furnished Rental (LMNP), it is essential to follow several steps to comply with tax legislation and benefit from the tax advantages associated with this status.
1. Register with the Commercial Court Registry
The first step is to declare your activity as a furnished landlord. For this, you must fill out form P0i, which will allow you to obtain a SIRET number. This number is essential to formalize your activity with the tax authorities. You have a 15-day window from the start of your activity to submit this declaration to the Commercial Court Registry. This step is mandatory for all owners wishing to operate a non-professional furnished rental activity.
Once completed, you will receive your SIRET number, which will be necessary for all future tax declarations.
2. Declare Your Rental Income
Each year, you must declare your rental income to the tax authorities. This declaration is made using form 2042 C PRO, an extension of the standard income declaration.
- If you are under the micro-BIC regime, you will need to report your rental receipts in boxes 5ND, 5OD, or 5PD. The micro-BIC regime offers a 50% allowance, meaning you will be taxed only on half of your receipts.
- If you opted for the actual regime, your receipts should be declared in boxes 5NA, 5OA, or 5PA. The actual regime allows you to deduct all your actual expenses, including loan interests, management fees, and depreciation of the property.
Management of Expenses and Amortizations
If you choose the actual regime, you benefit from a significant advantage: the possibility of deducting numerous actual expenses related to the operation of your property. These deductions allow you to reduce the amount of your taxable profit and, consequently, your taxes.
Here are the main deductible expenses you can include in your declaration:
- Management fees: These are fees paid for the rental management of your property, such as agency or accounting fees. These costs are fully deductible from your rental income.
- Repairs and maintenance: All costs related to maintaining the property, repair work, or minor improvements necessary for rental can be deducted. This includes plumbing repairs, roof work, or painting.
- Loan interest: If you have taken out a loan to finance the purchase, the interest on this loan is deductible. This is an important lever to reduce your taxable profit.
- Condominium charges: If the property is part of a condominium, the charges paid for the upkeep of common areas are also deductible.
In addition to expenses, the actual regime also allows for amortization of your property and furniture. Amortization involves spreading the deduction of the property’s value and furniture over several years, as their value diminishes over time.
- Property amortization: The value of your property is amortized over 20 to 30 years. Each year, you can deduct a portion of this value from your taxable income.
- Furniture amortization: Furniture provided to tenants (bed, table, appliances, etc.) can be amortized over a shorter period, generally between 5 and 7 years.
The amortization is a key advantage of the actual regime because it significantly reduces your taxable profit without requiring additional disbursements. By combining expense deductions and amortization, you can greatly optimize the taxation of your non-professional furnished rental activity.
Conclusion
Declaring a Non-Professional Furnished Rental (LMNP) can offer numerous tax benefits, especially if you choose the regime best suited to your situation. The micro-BIC regime is simple, but the actual regime allows for more expense deductions and better income optimization.
