LMNP investment is one of the best tax-exempt real estate schemes available. From a tax point of view, you’ll find that your rents won’t be taxed as property income, but rather as industrial and commercial profits (BIC). Under the micro-BIC or real estate tax regime, find out what you need to know about an
Definition of LMNP status
LMNP ( Loueur en Meublé Non Professionnel ) status is less well known than the Pinel or Malraux laws, but it is a real estate tax exemption scheme. As the name suggests, this status involves acquiring a property with the aim of renting it out on a furnished basis, with professionals, for example, responsible for its management and operation. Renting can be done under a flexible commercial lease, under which you will receive your rent quarterly. For the benefits of LMNP to apply, however, certain conditions must be met, such as the furnished accommodation being “self-contained” or located within an establishment providing “independent” services. residential services such as those for the elderly – student residences are also eligible -. which means that they have their own kitchen and living space, not shared with the other occupants of these facilities.
The advantages of LMNP investment
The LMNP regime offers many advantages for your real estate investments. One of the most advantageous is that rental income is taxed at a lower rate, allowing you to save more money on taxes and depreciation. And you don’t have to pay VAT either!
Extra monthly income
The rents you receive will automatically be added to your professional income. This increase in purchasing power won’t cost you much, but it’s an excellent way to build up your nest egg and gain quicker access to the property market.
In most cases, the accommodation concerned is small (T1 bis, T2 or studios) and the basic investment is affordable. This condition allows you to build up your assets and benefit from a flat-rate 50% reduction on your income.
You can comfortably amortize your real estate investment (excluding land) over 30 years thanks to the LMNP scheme. But this is subject to conditions: you must legally let the property for at least 9 years.
A simplified lease
Compared with a bare property, afurnished lease is more flexible in that it can be concluded for an adjustable period. For example, a nine-month term is possible for students. This is an important advantage, as it allows them to graduate without being tied down, and without having to worry about finding their own accommodation or leaving the dorms prematurely because they can no longer afford the fees.
LMNP investment eligibility criteria
To benefit from the advantages of LMNP status, you must meet the following criteria:
– Your furnished rentals must meet the requirements for residential use. They must include, among other things, bedding, a kitchen with equipment and tools such as pots and pans or tables and chairs; they also need lighting such as lamps or outdoor lighting; curtains are needed for windows that are not covered by blinds/shutters that maintain them, as well as maintenance equipment.
– They do not have to be registered with the Trade and Companies Register (RCS) as LMP (Location en Meublé Professionnel).
– The owner must have less than €23,000 in rental income. The latter may not exceed 50% of the owner’s annual income.
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