LMNP: what taxation?
To obtain LMNP status, the annual rental income received by the saver must not exceed €23,000 per year or 50% of the total fiscal household income. They must be declared in the category of industrial and commercial benefits (BIC). This allows the saver to opt for the micro-BIC scheme. A flat rate deduction of 50% will then be applied to your gross rental income. If this amount is exceeded or, optionally, below, the real simplified regime is applied. The investor will then have the possibility of deducting from his taxes all the expenses actually borne, whether they are acquisition costs, loan interest, maintenance and repair costs, property tax or even management and insurance costs. In addition, he can depreciate the property and the furniture that compose it. All of these deductions result in minimal or even zero tax revenue for many years. In addition, as part of an investment in a managed service residence, the future owner will be able to benefit from a VAT refund, ie 20% of the purchase price of the new furnished property*. In other words, he will only pay 80% of his investment. A substantial financial advantage.
Amortization, what is it?
Real estate loses its value over time. LMNP status has the advantage of paying for your investment over time. This means that, each year, part of the amount of the property purchased is deducted from the rental income. The repayment period varies depending on the type and amount of expenses. For real estate, the duration is between 25 and 40 years. Furniture can be depreciated over a period of 5 to 10 years. An accountant can help the investor deduct the amortization portion of his tax return.
How to be eligible for LMNP status?
To claim LMNP status, a person must:
- Being the direct owner of a furnished property for residential use: apartment, house, accommodation that is part of a managed residence (students, seniors or apartment hotels).
- Make sure that the accommodation is properly equipped to allow immediate and normal occupancy by the tenant, who will only have to bring their personal belongings. In a residence with managed services, the professional operator will be responsible for complying with these legal criteria and offering tenants the level of comfort required by the regulations.
- Be a private owner and declare your LMNP activity before the registry of the Commercial Court on which your property depends through the Cerfa P0i form. Thanks to this procedure, you will obtain a SIRET number (mandatory).
- Respect the maximum rental income limits, that is, a maximum of €23,000 per year or a maximum of 50% of the total income of tax housing subject to personal income tax.
Good to know : Service residences for students, seniors, and apartment hotels are eligible for the LMNP. A tax advantage, to which is added a significant profitability. In fact, when investing in a residence with managed services, such as those offered by Réside Études Immobilier, the estimated return can be up to 3.90% excluding tax. The investor will also be exempt from VAT on the purchase price of his property*. Réside Études Immobilier also has a partnership with an accounting firm, which will take care of all tax formalities.
Réside Études Immobilier helps you build your wealth, thanks to personalized support throughout your investment. An adviser is available at all stages of the acquisition of your property and even after. In addition, you benefit from remote support thanks to a 100% digital process: from requesting information to monitoring your site, going through administrative procedures.
*VAT refund at the current rate, within the framework of the acquisition of a property in a service or tourist residence managed by a professional operator – article 261/D4 of the General Tax Code.
Content produced in collaboration with Réside Études. No member of the BFMTV newsroom was involved in writing this content.
Source: BFM TV
