Posted Sep 29, 2022, 10:00 AM
The main attraction of the status of non-professional furnished lessor (LMNP) consists in building up rental income that is not taxed on a long-term basis thanks to the game of depreciation of real estate and furniture in force in the BIC regime. This formula is possible in the old as in the new.
Thanks to a mechanism of depreciation of the property, furniture and charges over a long period (from 25 to 30 years), furnished rentals “turn out to be a good way to collect rental income with little or no tax without constraint of location or rent level,” summarizes Stéphane van Huffel, Managing Director of Net Investissement and Leemo at Primonial. It is a good alternative to bare rental because the taxpayer switches to the system of industrial and commercial profits (BIC) which is more favorable than that of property income.
This configuration is interesting for a person wishing to prepare for retirement with little or no taxable income supplements. However, it will take 15 to 20 years before this deadline in order to build up this real estate with the help of a loan. This also avoids mobilizing cash that could be useful for investing in other financial investments or for keeping as precautionary savings.
Cumulative benefits
To be considered furnished, a dwelling must be fully occupied. A decree dated July 31, 2015 draws up a detailed list of the mandatory equipment and furniture to be provided. However, the competition being fierce and the tenants demanding, it is important not to confine oneself to this legal minimum.
Every effort should be made to make your property attractive and comfortable with quality services, modern equipment and up-to-date decoration.
Another advantage of this rental formula: the lease is short, ie 12 months, and renewable each year. If necessary, nothing prevents you from quickly recovering the property for personal reasons.
Opt for the real
When the annual rental income is less than €72,600, the micro-BIC regime applies by default. Attention, in this case, you will not be able to practice amortization. To do this, you have to give up the micro diet, and opt for the “real diet”. The micro-BIC makes it possible to apply a 50% reduction on receipts. This means that rents are only subject to income tax and social security contributions of 17.5% on half of their amount.
Please note: the value of an investment in stone is never guaranteed and there is nothing magical about this furnished formula. No one is immune to a necessary resale during a downturn in the real estate market, which can expose you to capital loss. Moreover, only a few large cities, tourist and/or student towns or business districts have a keen rental demand for these properties, which are rented 20 to 30% more expensive than a bare rental.
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