In the framework of providing you a clear vision, we give you a comparison of the two statuses in the table below:
| LMNP | LMP | ||
| 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 income | The 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 revenue | BIC non Professional | BIC Professional | |
| Amortisation | Yes, if the lessor is subject to ‘régime réel » of imposition | ||
| Deduction of loan interest and totality of charges | Yes, if the lessor is subject to ‘régime réel » of imposition : Administration fees Management fees Repairs | ||
| Fate of deficit | Charged on income of the same nature, i.e. on ‘BIC non-professionnels’ of the year | Unlimited charge on overall income | |
| Benefit of the censi bouvard tax reduction | YES | ||
| Regime applicable to capital gains | Capital gains of ‘particuliers ‘ | Professional capital gain | |
| TVA | Possible exemption in the event of a commercial lease to a hotel operator | ||
| Type of charges | Property 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 contributions | Capital income regime i.e. 17,2% | ‘Régimes des revenus d’activité’ i.e. 8% | |
| IFI | Taxable property | Exempt 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.