The LMNP status has real advantages that enables you to embark with confidence in this investment.
In addition to the simplicity of the procedures, the LMNP status offers very lucrative tax advantages.
LMNP status: micro-BIC and régime réel
The LMNP status offers the choice between two interesting tax regimes:
– The Micro Bic regime: abatement of 50% or 71% in the event of classification for a ‘meublé de tourisme’. In unfurnished rental, this abatement is only 30%.
– The ‘régime simplifié’: it allows to amortize the cost of the property, furniture, work and deduct all expenses related to the activity (co-ownership charges, acquisition costs, agency fees, loan interest …).
In unfurnished rental, only certain expenses are deductible.
- Carrying over the deficit :
If you declare a deficit under the régime réel simplifié, you can carry it forward in its entirety for at least 10 years on future furnished rental income.
Thus, you can be exempt from tax on your LMNP rental income for almost 10 years.
- The calculation of the value added in the framework of the LMNP
If you declare your rental income under the régime réel simplifié, you can benefit from real estate depreciation to reduce or even cancel your taxation.
In the case of a purchase of a service residence, you can also recover the VAT paid when purchasing the property.
Also, in the event of resale of the property, this depreciation is not reinstated in the calculation of the capital gain.
It is possible to opt for the Censi-Bouvard amendment applied to the LMNP law if:
- You are under the régime réel simplifié
- You have one or more accommodations in a service residence
- The accommodation is furnished according to the type of residence (student, medical, etc.) and the investor owns the furniture.
This device offers:
- A tax reduction of 11% of the acquisition price excluding VAT (capped at € 300,000) spread over 9 years. The balance of the tax reduction can be carried forward for the next 6 years, in the event of a tax reduction greater than the tax for the year.
- If you agree to keep the property for 20 years, you can recover VAT (up to 20%) on the purchase amount.
- If the investor acquires a new property: he will be able to recover the VAT upon delivery of the property
- If the investor acquires an old property already in operation: the amount of the sale will be exempted from VAT and will be excluded of tax
Thus, rental investment in LMNP has many advantages from different point of views:
- Patrimonial: build up or even develop your real estate assets
- Tax: this investment does not generate additional tax costs for several decades. From the perspective of preparing for your retirement, you can look towards the future with confidence
- Social: you participate in the development of specialized private rental real estate
- Economical: the rent will make you obtain an additional income