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Comparison of LMNP and LMP statutes

 In the framework of providing you a clear vision, we give you a comparison of the two statuses in the table below:

The properties concerned are …… furnished rental properties  
The sum of the rental income is …… lower to 23 000€… superior to 23 000€
The rental income …does not exceed 50% of total household incomeThe net rental income minus charges and depreciations is greater than 50% of the total income of the fiscal household
This status…Does not need to be registered to the « registre du commerce et des sociétés » (RCS)Need to be registered to the « registre du commerce et des sociétés » (RCS)
Type of detention– Tourism residence – Business residence – Student residence – Senior residence – Accommodation for dependent elderly people– Direct – SCI – SARL – EURL – SNC
Category of revenueBIC non ProfessionalBIC Professional
AmortisationYes, if the lessor is subject to ‘régime réel » of imposition
Deduction of loan interest and totality of chargesYes, if the lessor is subject to ‘régime réel » of imposition : Administration fees Management fees Repairs
Fate of deficitCharged on income of the same nature, i.e. on ‘BIC non-professionnels’ of the yearUnlimited charge on overall income
Benefit of the censi bouvard tax reductionYES  
Regime applicable to capital gainsCapital gains of ‘particuliers ‘Professional capital gain 
TVAPossible exemption in the event of a commercial lease to a hotel operator
Type of chargesProperty tax (tax foncière in French) Housing tax (tax d’habitation in French) CFE Vacant housing tax (Taxe sur les logements vacants- TLV in French)
Social contributionsCapital income regime i.e. 17,2%‘Régimes des revenus d’activité’ i.e. 8%
IFITaxable propertyExempt if: your income exceeds 23000€ per year AND if the net rental income minus charges and depreciations is greater than 50% of the total income of the fiscal household.
Advantages– Simplicity of procedures – Flexibility of status: if you wish to take back the property for your personal use, or sell it, it will be possible to do so whenever you want. – Tax reduction: in the case of purchase of newly constructed homes, tax reductions can get up to 11%, spread out over 9 years – Allows you to choose between the micro-bic regime and the régime réel – Carry-over of the deficit: in the régime reel simplifié, if a deficit is created, it is transferred in its entirety for at least 10 years to future income from furnished rentals. Thus, you may not pay tax on your rental income for ten years – Possibility of recovering VAT – Capital gains: In the event of a sale, capital gains of ‘particuliers’ that apply (more advantageous than those of professionals) If you declare in the régime reel simplifié, you benefit from real estate depreciation to reduce your taxation Depreciation is not reintegrated into the calculation of the capital gain in the event of resale of the property– Security of the commercial lease – The depreciation of the property allows you to be exempt from taxation on the income received – Tax exemption for other income and reduction of the IFI – Option to VAT possible on certain eligible properties
Inconvenients– A supervised tax reduction: to benefit from a tax reduction of 11%, rental companies must make their property available to the operator of the establishment or residence for a minimum period of 9 years – Complex bookkeeping -VAT recovery: subject to several conditions; at least 3 of the following 4 services must be offered: customer reception, supply of household linen, cleaning of the premises or breakfast service – no exemption of IFI, if the total amount of value of your property is 1.3 million.– Strict conditions for obtaining the LMP: – receipts > 23.000 € – income from furnished rentals > other household income

To conclude, the choice between the status of LMNP or LMP mainly relates to the amount of your rental income.

The advantages of LMNP and LMP status are numerous and make it possible to combine both profitability and attractive taxation. Indeed, between valued rents, low-tax rental income (for the micro-BIC regime), attractive profitability and the possibility of tax depreciation of your property, these statutes represent a real safe and lasting investment.

The LMP has a more advantageous tax system. As for the LMNP, it has fewer costs to bear and has many advantages, including simplicity of procedures and flexibility.

Finally, the range of properties giving access to these statuses is growing. Between student housing, tourist, business or senior residences, these sectors are far from experiencing the crisis.

Baby boomers and an aging population will reassure you about this real estate investment. It is up to you to find the best formula according to your objectives and within the framework of your constraints.

However, these statutes remain complex to apprehend. It is therefore advisable before embarking on getting good information or even seeking professional advice. They will enlighten you on the specificities of the devices according to your personal situation and your objectives.

Do not hesitate to contact our team and share your projects with confidence.

French Tax Online is a tax consultancy firm specialized in foreigners investing and living in France.

A member of the Budiz Company Group, which is a French chartered accountant registered with the Order of French Chartered Accountants (OEC).

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