Non-professional furnished rental meet a precise definition and are subject to a particular tax and social regime. We will briefly describe the rules related to this activity.
To designate non-professional furnished rental, we will use the acronym “LMNP” throughout this article.
I – Definition of L.M.N.P
This is the rental of apartments equipped with furniture and sometimes accompanied by services (guest rooms, residential hotels …). In these of an apartment rental, it must include all the elements necessary for normal occupation by the tenant. The list of these elements is provided by the decree N ° 2015-981 of July 31th 2015.
L.M.N.P. differentiates itself from the professional lessor, because the professional must meet three cumulative conditions:
- The total annual rental income exceeds € 23,000 including tax,
- These rental incomes exceed the amount of other professional incomes of the tax home,
- He must be registered with the registry of the commercial court for this activity.
As a result, any person who rents furnished dwellings and who does not meet one of the conditions listed above is qualified as L.M.N.P.
Nevertheless, L.M.N.P. must register as a non-professional at the registry of the commercial court on which the property depends.
II – Tax characteristics
Income from the furnished rental of part of the principal residence is not taxable in the following cases:
- When the rented rooms do not constitute the main residence of the tenant if the annual rental income does not exceed € 760. It can be an occupation by the day, the week, the month, etc.
- When the rented rooms are the main residence of the tenant. In this case, the rental price must be lower than a threshold published each year by the administration.
All furnished rental income is taxable in the category of Industrial and Commercial Benefits (B.I.C.).
A 50% deduction from the declared receipts is automatically applied by the administration in the case of rental of furnished apartments and furnished rental of unclassified tourism.
The rate of the abatement goes up to 71% for rentals in furnished tourism classified and bed and breakfast.
In order for the rented property to be qualified as a tourist accommodation or a bed and breakfast, the taxpayer must file a declaration with the town hall of the location of the rented property.
The 50% or 71% deduction includes all expenses including depreciation allowances. It cannot be allowed to result in a fiscal deficit.
- Real scheme
This tax system makes it possible to deduct all the expenses actually incurred, including depreciation charges on all investments.
There are two points to note, however:
- The depreciation charge cannot exceed the difference between the total rents collected and the total of other expenses. This means that depreciation cannot generate a deficit. The non-deductible portion of depreciation can be carried forward without limitation.
- In the event of a deficit, when the expenses are higher than the rents collected, this one can only be carried forward on the profits of the following years of the same rent.
The rules for professional and non-professional renters are the same.
The rate is in principle 10%, but the furnished rentals of dwellings are exempt from V.A.T.
Only the following rentals are subject to V.A.T:
- Accommodation in classified residences or tourist hotels,
- The provision of a furnished room with services similar to those offered by the hotel establishments,
- Rental of bare premises to the operator of a hotel establishment.
A tax reduction of 11% of the amount of the investment can be obtained with the device named “CENSI-BOUVARD”. The main conditions briefly summarized are as follows:
- Purchase of new or newly renovated housing
- Assignment of housing to a type of structure provided by the device,
- Leasing commitment by the taxpayer for a period of 9 years.
- C.F.E: All furnished renter are indebted. However, exemptions exist in the following cases:
- Occasional rental of part of the main residence,
- Current rental of part of the principal residence at a reasonable price,
- Rent of all or part of the main residence in furnished tourism. In this case the local authority may oppose the exemption.
- Housing tax: It is due by the tenant if he occupies the dwelling permanently (generally as a principal residence). It is due by the lessor if the rented premises constitute his dwelling or if he reserves the possibility of occupying them during a period of the year.
- Tax on real estate fortune (I.F.I.): Since the activity is not professional, the value of the premises must be included in the I.F.I base.
- Capital gain: In the event of an assignment of the property, the capital gain will be taxed according to the personal capital gains regime provided for in article 150 U of the C.G.I.
III – Specificities of the rental contract
The furnished lease must be written, it is concluded for a period of one year (instead of three years in the case of an unfurnished lease) with tacit renewal.
There are also two special cases of leases:
- For a student: Lease of nine months without renewal,
- Bail mobility of a duration of one to ten months for a person who seeks to lodge temporarily.
IV – Social regime
Rental of furnished apartments and classified tourist accommodation
Only professional hirers are subject to the contributions of self-employed workers. On the other hand, as the income of L.M.N.P. is not subject to social contributions, it’s subject to social levies paid at the same time as the income tax at the rate of 17.20%.
Bed and Breakfast
- If the annual income does not exceed € 5268 it is exempt from social contributions,
- If the annual income is more than € 5268, the operator must register on the website www.guichet-entreprise.fr. He will depend on the social security of the self-employed.
The status of L.M.N.P. responds to a very large number of particular rules that we cannot expose here in their entirety. Do not hesitate to contact us for any question on this subject, we will strive to answer you as soon as possible and provide you with as much detail as possible.
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