LMNP status: how does it work?

LMNP: How does it work fiscally?

To be a Non-Professional Furnished Rental Company (LMNP), your annual income must not exceed 23,000 euros per year or 50% of the total income of your household. They must be declared in the category of industrial and commercial benefits (BIC). Thanks to your LMNP status, you will have the possibility of opting for the micro-BIC regime if your income does not exceed 72,600 euros. In this case, a flat rate bonus of 50% will be applied to your gross income. Above this amount or below, optionally, you will be in the so-called “real” regime. What does that mean ? You will not have any lump-sum allowance, but the possibility of deducting all the expenses actually incurred (acquisition costs, interest on the loan, maintenance and repair expenses, local taxes, management expenses and insurance) and also of making the amortization of your property and your furniture. All these deductions together will allow you to get a very low tax income, or even zero, for many years. In addition, if you commit to maintaining your investment for at least 20 years, you can benefit from a VAT refund(1) (20% of the purchase price of your new furnished property). An important economic advantage that is only possible within the framework of the acquisition of a property in a residence with services or tourism managed by a professional operator.

What are the conditions to be eligible for LMNP status?

To claim LMNP (Non-Professional Furniture Rental Company) status, you must:

• Have a furnished property for residential use (apartment, house, accommodation that is part of a managed residence, for example, for students or elderly people).
• The accommodation must be properly equipped to allow normal occupancy by the tenant. In the case of a managed residence, the professional operator will take care to respect these legal criteria and to offer its tenant(s) a good level of comfort.
• Being a private owner and declaring your LMNP activity before the registry of the Mercantile Court on which your property depends via the Cerfa P0i form. Thanks to this procedure, you will obtain a SIRET number (mandatory).
• Respect the rental income ceilings (maximum €23,000 per year or no more than 50% of the total income of your fiscal household subject to personal income tax).

Good to Know: Student and senior residence halls are eligible for the LMNP. An advantage in terms of tax reduction(2) added to good profitability. In fact, by investing in a managed residence, such as those offered by Réside Études, the estimated return can reach up to 3.90% without taxes/taxes(3). Not to mention the possibility of recovering 20% ​​VAT on the purchase price(1). In addition, Réside Études has a partnership with an accounting firm that will take care of all your tax procedures.

1. Refund of VAT at the current rate in force, 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.
2. Within the framework of the provisions of the Treasury Law in force (Censi-Bouvard Law). Tax savings equivalent to 11% of the amount without VAT of your investment with a limit of €300,000. This tax savings is applicable to any new housing acquisition in a residence with services for students or the elderly, managed by a professional operator, eligible for this status and regularized by a notary public no later than 12/31/2022.
3. Rate proposed on 01/08/2022 on the amount of the property without VAT of the investment, according to the commercial lease proposed by the manager and according to available stock.

Content produced in collaboration with Réside Études. No member of the BFMTV newsroom participated in the writing of this content.