What is professional furnished rentals (LMP)?
The income you earn from renting out your furnished rental, as well as from a potential sublease, is subject to tax according to the French tax system. Under the category of industrial and commercial profits (BIC), it's considered another form of income tax.
It's important to remember that according to Decree No. 2015-981 of July 7, 2015, a furnished rental is defined as a refurbished property that includes all the essential furniture pieces needed for stable housing.
What are the conditions to be met to be a professional furnished rental company?
When you rent out your furnished property, that doesn't automatically make you a professional furnished rental business. You need to meet two specific conditions before that:
Do note that any income you earn from renting out your furnished property in France, whether you're a professional or not, is still subject to tax.
Most of the time, property owners/landlords opt for the micro BIC regime, out of simplicity or ignorance of the simplified real regime.
- Your annual revenue from the rent (and potential sublease) amounts to €23,000.00 a year.
- The receipts from the rent exceed your own income from other sources (i.e. salary from employment, earnings from your own business, etc.)
Do note that any income you earn from renting out your furnished property in France, whether you're a professional or not, is still subject to tax.
Most of the time, property owners/landlords opt for the micro BIC regime, out of simplicity or ignorance of the simplified real regime.
The micro BIC regime vs The simplified real regime
Micro BIC Regime BIC
- It's simple to set up
- There's a possible reduction of 50% of gross income (including expenses) and 71% in the case of furnished Tourist Accommodations.
- Simply indicate the amount of revenue earned during the year on the general tax return (form n°2042 C PRO) in the Industrial and Commercial Profits Section.
- A Ceiling of €72,600.00 per year
- Tax base: flat-rate
- Social Security Contributions: 17.2%
Real Regime
- File for each of the financial years
- A bundle n ° 2031 to the Corporate Tax Services (SIE) which manages the place of the geographical location of your furnished rental if you have a single property, or several furnished rentals upon which will depend either on your main residence or your most important property.
- Declaration on Forms 2031 and Annexes 2033
- An income of more than €72,600.00 a year in rental activities must be declared on the simplified real regime
- Constitutes a Tax Saving
- Rent including Charges - Costs and Interest - Depreciation
- Social Security Contributions: 17.2%
What are the obligations for a furnished rental company?
Upon becoming an official professional furnished rental business, you then have to fulfill certain obligations. They include:
- Obtaining a SIRET number
- Becoming liable for the Contribution Foncière des Entreprises (CFE)
- Paying The Contribution on the Added Value of Companies (CVAE) and Value-Added Tax (VAT)
- Your furnished rental should allow the tenant to cook (kitchen), give them access to drinking water (proper water pipes), include sanitary equipment (toilet, bath, etc.), and offer proper sleeping (bed) and storage space (closet, wardrobe, etc.).
- The owner/landlord is also required to submit a Technical Diagnosis file, inventory of furniture & fixtures, and rental receipts to the tenant.
By default, what are the taxes in force for furnished rentals?
Whether you're a professional landlord or not, you still need to pay taxes on your furnished rental. These include:
- The Business Property Assessment (CFE).
- Property Tax.
- The Housing Tax (Paid by the current occupant every January 1st of The Year).
- The Tourist Tax (Applicable to holiday accommodations. The tax rate varies between 1% to 5% of the rent per person per night depending on the type of property it is).
- The Generalized Social Contribution (CSG), The Solidarity Levy, and The Contribution to the Repayment of the Social Debt (CRDS) - an overall rate of 17.2%.
How does the declaration work for a non-professional rental company?
If this is the beginning of your activity as a non-professional furnished rental company (LMNP), and it is therefore the first time you rent furnished property; it is imperative to fill in the Cerfa n ° 11921 * 07 or P0i from the beginning of the rental , that is to say within the first 15 days of the beginning of the rental of the property.
1.Si you are on the micro BIC diet
2.Si you are on the simplified real regime
If you are a member of an approved management organization and you use the services of an accounting professional, you will have to indicate the amount of profit calculated on the declaration n ° 2031 in specific boxes.
If, however, you are not a member of an approved management organization and you do not use the services of an accounting professional, you will have to indicate the amount of the profit in other specific boxes.
1.Si you are on the micro BIC diet
- It will be necessary to indicate the total amount of the sums you have collected (rents, charges invoiced to the tenant and provisions for charges) for your rentals excluding rental of guest rooms and furnished tourism. A flat-rate allowance of 50% will be applied.
- It will be necessary to indicate the total amount of income from the rental of classified furnished tourist accommodation or bed and breakfast. A flat-rate allowance of 71% will be applied.
2.Si you are on the simplified real regime
If you are a member of an approved management organization and you use the services of an accounting professional, you will have to indicate the amount of profit calculated on the declaration n ° 2031 in specific boxes.
If, however, you are not a member of an approved management organization and you do not use the services of an accounting professional, you will have to indicate the amount of the profit in other specific boxes.
What are the expenses deductible from the rents received?
As with any other tax, the taxes you pay for your furnished rental comes with a few deductible costs.
- Notary or Incorporation fees
- Local Taxes
- Maintenance and Repair Costs
- Loan Interest
- Management Fees and Insurance
- The Depreciation of Furniture over a period of 5 to 10 years, for a rate of between 10 and 20% per year.
Ce qu’il faut retenir :
The income resulting from the furnished rental of which you are the owner-lessor, as well as that which comes from a potential sublease, are subject to income tax in the category of industrial and commercial profits (BIC).
As a reminder, according to Decree No. 2015-981 of 31/07/2015, we call furnished rental, the provision of a furnished home that includes all the furniture elements essential for normal occupation
As a reminder, according to Decree No. 2015-981 of 31/07/2015, we call furnished rental, the provision of a furnished home that includes all the furniture elements essential for normal occupation
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Posted on 06/12/2022 by
Andy LECUYER
