What is a Non-Professional Furnished Rental (LMNP)?
The Non-Professional Furnished Rental (LMNP) is a tax scheme intended for property owners who wish to rent out furnished accommodation while benefiting from tax advantages. This status applies if the rental income does not exceed a certain ceiling.
Applicable Tax Regimes in LMNP
When deciding to rent out 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. Two options are available: the micro-BIC and the actual regime. Each regime offers different advantages depending on your rental income and expenses.
The Micro-BIC Regime
The micro-BIC (Industrial and Commercial Profits) regime is accessible if your annual rental income is below €72,600. This regime is particularly attractive for owners with few deductible expenses. It offers a flat-rate deduction of 50% on rental income, meaning you are taxed only on half of your receipts. This deduction covers all expenses, without the need to justify them.
The main advantage of the 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 advantageous if your costs are high, especially in case of extensive work or high loan interest.
Note that if you exceed the €72,600 threshold, you will be automatically switched to the actual regime, which is better suited for investors with high expenses.
The Actual Regime
The actual regime is another tax regime offered for furnished landlords not professional. Unlike micro-BIC, it does not offer a flat-rate deduction but allows for the deduction of all actual expenses related to the rental activity. This regime becomes mandatory if your rental income exceeds €72,600, but you can also choose it voluntarily if your expenses are higher than 50% of your receipts.
Under the actual regime, you can deduct several types of expenses, such as:
- The loan interest contracted for purchasing the property,
- The management fees (e.g., agency fees, insurance),
- The maintenance and repair work,
- The property taxes,
- The co-ownership charges,
- And importantly, the depreciation of the property and furniture, which constitutes a powerful fiscal lever. Depreciation involves deducting, each year, a part of the property’s and furniture’s value over 20 to 30 years for the real estate and 5 to 7 years for furniture.
This regime is thus more complex to manage, requiring strict bookkeeping and often the intervention of a professional accountant to calculate depreciations and declare deductible expenses. However, it is generally more advantageous than micro-BIC for owners incurring high costs, as it significantly reduces the tax payable.
Furthermore, with the actual regime, it is possible to generate a rental deficit, meaning if your expenses exceed your rental income, you can carry forward these losses to future years, for a maximum of ten years. This mechanism helps offset future profits and further reduces 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 Trade Court Registry
The first step is to declare your activity as a furnished rental provider. To do so, you must fill out the P0i form, 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 Trade Court Registry. This step is mandatory for all owners wishing to engage in non-professional furnished rental activity.
Once completed, you will receive your SIRET number, which is necessary for all future tax declarations.
2. Declare Your Rental Income
Each year, you must declare your rental income to the tax authorities. This can be done using form 2042 C PRO, an extension of the standard income declaration.
- If you are under the micro-BIC regime, you should report your rental receipts in boxes 5ND, 5OD, or 5PD of the form. The micro-BIC regime offers a 50% flat deduction, meaning you are only taxed on half of your receipts.
- If you have chosen the actual regime, your receipts must be declared in boxes 5NA, 5OA, or 5PA. The actual regime allows you to deduct all your actual expenses, including loan interest, management fees, and property depreciation.
Managing Expenses and Depreciation
If you opt for the actual regime, you benefit from a significant advantage: the ability to deduct a wide range of actual expenses related to your property’s operation. These deductions help you reduce your taxable profit and thus your tax burden.
Here are the main deductible expenses you can include in your declaration:
- Management fees: Fees paid for managing your rental property, such as agency or accounting fees. These costs are fully deductible from your rental income.
- Repairs and maintenance: All costs related to property maintenance, repair work, or minor improvements needed for rental. Examples include plumbing repairs, roof work, or painting.
- Loan interest: If you took out a loan to finance the purchase, the interest on this loan is deductible. It is an important lever to reduce your taxable profit.
- Condominium fees: If the property is part of a coproperty, fees paid for common area maintenance are also deductible.
In addition to expenses, the actual regime allows for depreciation of your real estate and furniture. Depreciation involves spreading the deduction of the property’s and furniture’s value over several years, as their value decreases over time.
- Depreciation of real estate: The value of your property is depreciated over 20 to 30 years. Each year, you can deduct a portion of this value from your taxable income.
- Depreciation of furniture: Furniture provided to tenants (bed, table, appliances, etc.) can be depreciated over a shorter period, typically between 5 and 7 years.
The depreciation is a key advantage of the actual regime because it significantly reduces your taxable profit without requiring additional cash outlay. Combining expense deductions with depreciation can greatly optimize the taxation of your non-professional furnished rental activity.
Conclusion
Declaring a Non-Professional Furnished Rental (LMNP) offers many tax advantages, especially if you choose the regime best suited to your situation. The micro-BIC regime is simple, but the actual regime allows for greater expense deductions and tax optimization.
