TAX OPTIMIZATION OF YOUR RENTAL INVESTMENT:
France has the reputation of a tax hell, but actually it is compensated by many tax loopholes. In some cases, the French government sets special rules and softer taxation in order to attract investment in given sectors.
Les régimes « Loueur Meublé Non Professionnel » (LMNP) et « Loueur Meublé Professionnel » (LMP) sont des dispositifs mis en place pour stimuler le secteur immobilier locatif.
Non-Professional Rental of Furnished Property The schemes "Non-Professional Rental of Furnished Property" (in French “Location Meublée Non Professionnelle " shortened in LMNP) and "Professional Rental of Furnished Property" (in French “Location Meublée Professionalle shorthened in LMP) belong to those tax loopholes created in order to stimulate real estate sector with the following expected effects:
THE ADVANTAGES OF FURNISHED RENTAL REGIMES - LMNP or LMP
The LMNP (Non-Professional Rental of Furnished Property) and LMP (Professional Rental of Furnished Property) differs only according to the incomes they generated and what percentage they represent in the overall investor’s incomes.
If your rental incomes are over 23 000 €/year and represent more than 50% of your total incomes then you are considered as a professional. For non-residents French tax administration will only take into account incomes generated in France. So over 23 000 €/year of rental income you’ll be seen as a professionnal.
Compared to an empty rental, the difference is huge.
We swap from a civil status:
Empty rented real estate estate income
to a commercial status where are generated Industrial and Commercial Profits
Furnished rented real estate Industrial and Commercial Profits
Under the LMNP or LMP regime, taxes are calculated on the basis of rents net of all deductible expenses and are therefore greatly reduced or nil.
This advantage of LMNP taxation is valid in both new and second-hand real estate markets.
Determination of LMNP tax deductible expenses
Whatever the applicable regime (furnished rental taxation or empty rental), the tax administration offers two options to determine the deductible expenses on turnover of rented real estate:
Option 1: Flat-rate estimate of deductible expenses per year
Option 2: Determination of the actual amount of deductible expenses.
Apart from current management expenses, furnished rental taxation makes it possible to integrate depreciation and amortisation of the property into deductible expenses, whereas this is not the case in empty leases.
This effectively erases almost all taxable income and makes it possible not to pay taxes on rents (or very little).
Based on the furnished rental (LMNP or LMP) regime we offer 3 types of investment in the new or in the second-hand market:
Some examples of managed senior residences:
Managing companies are chosen among the most solid ones of the field dealing with hundreds of residences in France and abroad.