The LMNP (acronym for " Non-Professional Furnished Rental" ) is a special legal and tax status that concerns investors in furnished rentals, for new or old properties. It allows you to rent furnished accommodation for short periods as seasonal rentals (Airbnb-type tourist accommodation) or for longer periods.
Non-professional furnished rental is a regime similar to para-hotel accommodation, defined by article 155 IV of the French General Tax Code. It allows you to offer seasonal rental services, whether short or long term. The LMNP status ( non-professional furnished rental) dates back to 1862.
The status of Non-Professional Furnished Rental allows an investor to acquire a property, new or old, in order to rent it furnished to a third party. The accommodation must be summarily equipped (bedding, kitchen accessories, furniture, etc.) in order to allow the tenant to move in with just their suitcases.
LMNP conditions: Equipment required for furnished rental:
You can rent furnished accommodation provided that you equip your accommodation with at least the following items:
- Bedding (mattress, pillows, duvet)
- Curtains or shutters to block out light in bedrooms
- Hotplates
- An oven or microwave
- A refrigerator (with a freezer section required in the absence of a freezer)
Sufficient quantity of dishes (depending on the maximum occupancy of the accommodation)
Kitchen equipment
A table and seats
Storage (shelves, cupboards, etc.)
Lighting fixtures
Maintenance equipment suitable for everyday use in the apartment or furnished house.
If you do not meet the conditions of sufficient equipment, you risk the reclassification of your furnished accommodation as an unfurnished rental and you will not be able to claim the status of Non-Professional Furnished Rental Company. ! Do not hesitate to provide additional equipment and furniture in order to distinguish your accommodation from other properties to rent on the market.
LMNP in serviced residences
At the end of the 80s, a new concept transformed furnished rentals: managed service residences . This system frees landlords from daily management, and in particular from the burden of finding tenants and collecting rents.
This property can be integrated into a service residence (seniors, tourism, business, students or dependent elderly people EHPAD). In this context, the investor will see the rental management of his property entrusted to a specialized manager. A commercial lease will therefore be signed between the purchaser and the manager, for a period of between 9 and 12 years or more.
Serviced residences are often new buildings whose apartments are delivered fully equipped. They are offered to a specific clientele:
- tourist residence for short-stay tourist customers (Odalys, Nemea)
- senior residence (Ehpad), medicalized or not, for retirees (like Domitys, or the Jardins d'Arcadie
- business residence (Appartcity type) for travelers on business trips;
- studios for students (like Réside Etudes)
LMNP and taxation
LMNP is a civil activity under the Civil Code. Indeed, a decision of the Court of Cassation of April 30, 1862 specifies that: "the rental of buildings is not [...] the subject of a commercial enterprise, whether the apartment is rented unfurnished or furnished."
This solution was confirmed by a decision of the Court of Cassation dated November 10, 1993.
The tax status of the Non-professional Furnished Rental (LMNP) was created in 1949 and allows investors to benefit from LMNP taxation , i.e. to reduce the taxation of their rental income. And this, whether with the "depreciable LMNP" formula or with the Censi-Bouvard system .
The legislator wanted to encourage individuals to rent furnished accommodation to "transitional" groups - students, posted workers, seniors, tourists - for whom the housing supply is very insufficient. There is an increasingly strong demand in France for this type of accommodation: increase in the student population and continued expansion of the senior population , and evolution of lifestyles towards convivial housing .
LMNP and its advantages
Concretely, furnished rental in LMNP presents 3 major advantages compared to unfurnished rental
- Flexibility regarding rents, free, and notice periods
- Rental profitability, higher than that of bare rental
- Taxation above all, since rents from unfurnished rentals are property income, and are therefore heavily taxed, while rents from furnished rentals are industrial and commercial profits . This allows you to deduct not only the costs and expenses related to maintenance, but also the accounting depreciation, which, by reducing the taxable base, leads to low or zero taxation of rental income over a long period.