As a provider of furnished rentals, you can choose to declare tour income under the micro-BIC regime or under the ‘Réel Simplifié’, which is often better. If you are not sure which tax regime is most advanteous for you, feel free to use our free simulator.
Location Meublé Non Professionnel (LMNP): ‘Réel Simplifié’ or ‘Réel Normal’?
The ‘réel simplifié’ regime applies by law to the taxpayer whose annual pre-tax revenues ranges between €72 600 and €247 000. It can be applied by the preference of the taxpayer when his revenue is below €72 600.
When the revenue exceeds €247 000, it must be declared under the “normal reel” regime and not under the simplified one. In the end, the regime ‘réel simplifié’ is most suitable for owners.
Calculation of taxable profit
In the case of the regime ’réel simplifié’, taxable profits are calculated according to the rules for Industrial and Commercial Benefits.
The income is composed of pre-tax rental income, whether collected or not, as well as the provisions for charges provided by the contract and the additional recipes. Consequently, your taxable revenue corresponds to the difference between annual revenue and annual charges, plus tax-deductible provisions for depreciation.
The regime ‘réel simplifié’ allows you to deduct the following charges from your furnished rental income:
The “réel simplifié” system allows deduction of tax-deductible depreciation provisions
In accounting, tax-deductible provisions for depreciation allows taxpayers to recover the cost of property or assets they've “placed in service" as part of their business operations. They generally cannot deduct the full cost of an asset in the year of purchase if it is a capital expenditure, but can instead spread the cost over a number of years in a process known as depreciation.
In the case of renting out a furnished property, we estimate the depreciation of the used asset and add it as a charge to taxable income, reducing net income by the same amount, pushing downward the tax paid on the exercise.
The elements subject to depreciation are listed here.
As you can see, depreciation is clearly one of the most important elements of renting. Following the rules can clearly help you save a lot of taxes. It is often through depreciation that many owners avoid paying a lot of taxes. 85% of them pay very little or even zero taxes.
However, it is good to precise that it is an imperative, when offering a furnished rental service, to ask for help in doing the tax return when you are in the regime “Réel Simplifié”. Indeed, one mistake on the cerfa declaration form, or during the calculations can make this regime very burdensome and less profitable and can force you to call upon a professional service for the corrective reports of the previous years, which can be particularly costly.
What are the concrete obligations ?
To declare your revenues when you are under the ‘Réel Simplifié’ regime, you must send a special declaration n° 2031 via a teletransmission system to the corporate tax authority responsible for your property.
This teletransmission of your furnished rental income, when you are under the “Réel Simplifié” regime, must contain the following attachments:
The benefit is declared, under the control of the tax administration. The accounting obligations are very limited: you must keep record of income, expenses, and, if necessary, a record of assets.
If the owner rents a furnished property, it must include a list of the equipment relative to the comfort of the tenants. This list consists of 11 compulsory equipment items:
The advantages and disadvantages
Although the tax return and accounting formalities are more complex, in most cases the real simplified regime allows you to optimize your taxation. In fact, it is common for the amount of deductible charges and depreciation to exceed 50% of annual revenue.
Thanks to our services, you can easily declare your LMNP income under the Real Simplified regime, and save taxes!
Contact us and we’ll get back to you as soon as possible.