The income you receive from the rental of furnished property, as ‘loueur en meublé non professionnel’ (LMNP), is subject to the progressive scale of income tax. They must be declared as industrial and commercial profits (BIC) and not as tax on property income which would be less favorable.
Thus, you are entitled between two types of tax regimes: either the micro-BIC regime or ‘réel simplifié’ regime.
In the following sections, we offer you a comparison of these two statuses on all of these criteria in order to assist you in choosing the status that best suits your profile.
|Régime BIC||Régime réel simplifié||Régime réel normal|
|Procedures||– Complete the POi form to get a SIRET identification number; |
– If you own more than one property, you must enter the address for which you receive most of the income;
– Choose a tax option (Micro, réel simplifié, normal réel)
|Conditions for classic rentals||Annual turnover excluding VAT < €72.600/year||Turnover excluding VAT between: €72 600 and €247 000||Turnover excluding VAT >€247 000|
|Conditions for classified seasonal rentals||Annual turnover excluding VAT <€176 200||Turnover excluding VAT between: €176 200 and €818 000||Turnover excluding VAT >€818 000|
|Calculation of taxable profit||Automatic abatement of: 71 % of turnover for classified seasonal rentals |
50 % of turnover for classic rentals
|Taxation based on net profits||Taxation based on net profits|
|Income to be declared||Gross annual turnover (excluding VAT, without deducting any allowance) + any realized capital gains or losses||Net profit + Any realized capital gains or losses||Net profit + Any realized capital gains or losses|
|Tax declarations and accounting obligations||N°2042 C Pro||N°2042 C Pro ‘Déclaration de résultat des BIC n°2031’ Liasse of annex tables n°2033-A à 2033-G||N°2042 C Pro ‘Déclaration de résultat des BIC n°2031’ Liasse of annex tables n°2050, n°2051, n°2052, n°2053, n°2059-F, n°2059-G|
|Accounting obligations||Stay up-to-date with the accounts in the event that the owner wishes to switch to régime reel.||You must keep a journal of receipts and expenses, and, if applicable, a register of fixed assets.|
|Material obligations||If the owner rents a furnished property, he must respect a list of mandatory equipment inherent to the comfort of his tenant. This list of 11 mandatory items will include: Baking trays A classic oven or microwave A table and chairs or seats Complete bedding (bed or sofa bed + duvet or blanket) Crockery and cutlery Lighting Household maintenance equipment A refrigerator and a freezer Kitchen utensils A window shading device in the bedroom(s) Storage shelves|
|Advantages||This regime is favorable if you are taxed low and have good profitability, especially in furnished accommodation, which allows you to benefit from a reduction of 71%.||The ‘régime réel’ allows you to optimize your taxation in most cases. Indeed, it is common for the amount of loan interest, amortization and deductible charges to lead to a zero tax results. The lessor has no income tax or social security contributions.|
|Disadvantages||The 50% allowance is often less attractive for tax purposes than the deduction of deductible charges and depreciation from the ‘réel simplifié’ régime.||For the declaration formalities, a specialist accountant should be used.|
The tax on furnished rentals is not only one of the oldest loopholes in France, but certainly one of the most interesting ones to minimize taxes on your rental investments.
However, as a non-professional furnished rental company (LMNP), you have a choice in terms of the taxation of your rental income: the micro-BIC regime or the ‘régime réel’.
This choice will largely determine the taxes you will pay on your rental income.
If you do not know which plan is the most advantageous, do not hesitate to contact our experts who will offer you customized support to ensure you maximum profitability.