The purchase of a property under the status of non-professional furnished rental company (LMNP) is a very advantageous investment, especially in tax terms. Nevertheless, certain constraints may oblige you to resell your LMNP property. In this context, what is the procedure to follow? What are the financial aspects to take into account?
Here is the point of all the important information to know before starting.
What are the criteria for correctly estimating the value of an LMNP asset?
Renting non-professional furnished accommodation (LMNP) means investing in managed residences (senior, student, tourism or business residences). This investment makes it possible to benefit from relatively secure income and advantageous taxation. However, if you face a life hazard or simply want to reorganize your assets, you can resell your property.
To do this, the first step is to correctly estimate its value. This is an essential step, because it defines the profitability of the operation. In order to find the right price at which to resell a property, the ideal is then to base oneself on the following criteria:
- The state of the residence;
- The location of the property;
- The solidity and clarity of the lease;
- The profitability of the residence;
- The evolution of rental market prices;
- The professionalism of the operator of the property.
For a precise estimate, the ideal remains entrust this step to an expert.
Taxation and other financial aspects to consider before reselling an LMNP property
Taxation is an important point to consider in the sales process. This allows you to anticipate any costs that may be payable by you. Here is what you need to know to be well prepared.
The capital gain on the resale of an LMNP property
In addition to social security contributions, non-professional furnished rental companies are subject to real estate appreciation. The latter is estimated by making the following calculation: acquisition price – resale price. Generally, this difference is small since the costs generated by the real estate transaction are added to the purchase price.
Once this calculation has been made, there is an abatement system which is used according to the duration of detention of the property. Indeed, for the resale of an LMNP property held for more than 6 years, you benefit from an abatement on the real estate capital gain. Similarly, the resale of property held for more than 22 years is totally exempt.
Good to know : Real estate capital gains are subject to income tax at the rate of 19%. Social contributions on income are taxed at the rate of 17.20%.
What about VAT?
Remember that when buying a property in a managed residence, you benefit from a 20% VAT refund. However, it is necessary keep the property for at least 20 years to take advantage of this benefit.
To note : three types of farms are not exempt from VAT. These are hotels, para-hotels and classified tourist residences.
If you decide to sell your LMNP property earlier, you are required to refund the VAT pro rata temporis, that is to say in proportion to the time actually elapsed. For example, if you put your property up for sale after 10 years, you must return 50% of the recovered VAT. On the other hand, if the purchaser of the property is subject to VAT and if he continues the activity of LMNP, the 20-year period normally continues.
The next steps to close the sale
After estimating the value of your property, you can start finding potential buyers. For this, it is recommended to compile a good file which presents the advantages (attractive price, ideal location, level of expected income, etc.) linked to the acquisition of your property.
Also remember to take stock of the advantages of renting in LMNP in order to find the necessary arguments to convince investors. If you find potential buyers, you can organize visits to the residence, start negotiations and close the sale.
Naturally, it is highly recommended to highlight the property before putting it on the marketin order to optimize profits from resale.
Finally, to speed up the sale you can entrust the sales mandate to a professional.
Reselling an LMNP property: the specific case of the Censi-Bouvard system
Coming into force on January 1, 2009, the Censi-Bouvard law promotes real estate investments in new construction. To benefit from the advantages (in particular the tax reduction) of this system, the accommodation must be rented out for at least 9 years.
So you can resell after 9 years of operation. Thanks to the Censi-Bouvard device, the resale price that you determine for your property allows you to realize an interesting capital gain. In this context too, the tax on the latter is exempt after 20 years.
What you must remember
In short, to resell an LMNP property, start by properly estimating its value. Then clarify the aspects related to taxation before you start looking for a buyer. If you benefit from the Censi-Bouvard system, your LMNP property can only be resold after 9 years of operation.
Read also: Buying a house before selling yours: a practical guide