Even though the non-professional furnished rental (LMNP) shows its limits in terms of taxation of capital gains, the status of LMP, renter in professional furniture, seems more advantageous on this criterion. Who can embark on such a project? What do you need to know before investing?
How to become a renter in professional furniture?
The conditions to enter the category of professional furnished renters (LMP) are strict. There are three in total:
-The compulsory registration in the Trade and Companies Register (RCS) as a professional renter;
– Annual rental income exceeding € 23,000 including tax;
– Rental income representing more than 50% of the resources of the tax home.
In short, the professionally furnished rental must take on the role of full occupation and ensure a large part of the family income.
Professional furnished renter: the advantages of the scheme
The investor has the right to deduct more expenses from his overall income than if he realized a bare rent. All expenses, such as maintenance expenses, amortization and repairs, can be charged to income and thus contribute to the reduction in taxes. Borrowing interest is also part of the property deficit to be charged against income.
In the context of a resale, we mobilize the system of professional capital gains, more advantageous than that of individuals. Under certain conditions (activity carried out for more than 5 years, annual receipts less than 90 000 € HT), taxes are not applicable – if the ceiling is exceeded, the latter may be reduced. In addition, the heritage of the LMP falls into the category of professional property. In this sense, it does not fall under the Solidarity Tax on Fortune (ISF).
Some disadvantages to know
If the allocation of the deficit is theoretically possible for the hirer in professional furniture, it remains complex. Indeed, most of the deficit comes from depreciation. The latter allows to deduct 2 to 3% of the value of the property each year, without offering a significant tax savings.
In addition, if real estate gains are not subject to tax, they may involve contributions. In general, the system of professional capital gains can be advantageous if you control it well because, in some cases, sometimes high taxes can generate unpleasant surprises.