LMNP status is an excellent way to build wealth for retirement. This tax exemption system offering significant advantages is also easy to adopt. Update on the essentials to know about this reassuring investment.
Summary
Understanding LMNP
The LMNP for non-professional furnished rentals is a good investment that allows you to generate potentially high returns. This status will be able to adapt to your objectives whether it is a question of preparing for retirement, tax exemption or building up a real estate asset.
The principle of LMNP
The principle of non-professional furnished rental has many attractions and is relatively simple. You acquire a furnished or unfurnished property, then you furnish it if necessary. You then rent it out with furnished status. Being in a furnished rental situation, you must imperatively equip the accommodation with the furniture necessary for everyday life. The LMNP system allows you, depending on the method of financing, to generate tax-free and tax-free income. Thanks to him, you invest with 0 euro of contribution and you benefit from rents guaranteed over more than 9 years by a commercial lease.
How to invest in LMNP?
To invest in LMNP, you must register at the business formalities center a fortnight before the start date of the rental of your property. You will then have to make a declaration to the clerk of the Commercial Court on which your rental property depends. In the case of many furnished rentals, the registry of the Commercial Court concerned is that of the place where one of the furnished apartments is located or that where the main activity is carried out. We strongly recommend that you request support from a promoter for the purchase of a new apartment in Les Sables d’Olonne. Note that registration is done using a Cerfa P0i form by a natural person who exercises a self-employed self-employed activity. It allows you to obtain a SIRE number, to declare the existence of this activity and to indicate the tax system you have chosen.
The benefits of LMNP
Non-professional furnished rentals were created to support rental investment in service residences (students, medical facilities and tourism). As long as we respect the rules, it has great advantages.
The main advantage: a reduction in taxes
Investing in LMNP status allows you to benefit from advantageous taxation. You have the choice between two regimes when declaring your income: micro BIC (industrial and commercial profits) and real. The first allows you to receive a 50% reduction on your income if your receipts do not exceed 70,000 euros. The reduction can be 71% if your property is classified as furnished tourist accommodation. The second choice is for those whose income exceeds 70,000 euros. The LMNP system amortizes the value of the property, works and furniture. It also makes it possible to deduct all the expenses related to the activity from the income. Note that if you declare income from furnished rentals under the real regime, you benefit from real estate depreciation in order to reduce the taxed amount. Indeed, the depreciations do not impact the calculation of the added value, because the latter is done according to the case of the added value of the individuals.
The other advantages of the LMNP diet
In addition to attractive taxation, the LMNP regime has other advantages. In particular, it is accessible to everyone and gives you merchant status. Thus, you will be able to recover all the VAT related to the accommodation in one go. If you cease the activity, the added values of individuals, which are more advantageous, and not those of professionals are applied. Indeed, thanks to its flexibility, this status allows you as an investor to take over the property for your personal use. You can also sell it as soon as you return to your status position by following the conditions of the lease. Losses are otherwise taken into account and will not be included in the overall income. The other advantage concerns the management of your property, which will be taken care of by a professional operating company. Via a lease of 9 to 11 years, the manager you have chosen undertakes to pay you the rent and to take care of the elements concerning rental management.
The conditions of the LMNP
The conditions for benefiting from the LMNP regime are easy to apply. They do not require renting to a person who could have been deemed insufficiently creditworthy. Nor do they involve understating the rent.
Be a natural person and direct owner
You must be an individual, because the LMNP regime does not apply to legal persons like companies. However, exceptions are possible for translucent companies such as SCIs or family SARLs. You must also be the direct owner of the property. Indeed, you will not be able to benefit from the advantages of the regime if you indirectly hold the property by means of SCPI for example.
A property used for housing and rented with the « furnished » status
Under the LMNP, the house or apartment must be used for living. The use can be for a main residence (LMNP Senior, Student or EHPAD) or seasonal (LMNP Sea or Mountain). The property must also be rented with furnished status, which implies that it must have enough furniture and equipment. Thus, the tenant will not need to bring anything other than his personal effects.
Renting the property should not be your main activity
In order to benefit from the privileges of the LMNP regime, the rental of your property must not constitute your main activity. However, if you are in this situation, the rental income must be less than 23,000 euros per year for you to continue to remain in the scheme. Otherwise, the LMP regime (professional furnished rental company) is the one that will be applied. In addition, as long as you have not registered with the RCS (trade and companies register), this activity must be secondary.
