LMNP declaration: the steps according to the tax regime chosen

The impact of the tax regime on the return

Selecting the tax regime is a decisive decision in the management of your furnished rental properties. In LMNP (non-professional furnished rental), this decision directly influences the ease of management, the tax burden and the potential for profitability of your investments. The two options available — the micro-BIC and the simplified real BIC regime — have specific advantages and constraints that can significantly affect your tax return and your obligations.

Micro-Bic: simplicity and a lump-sum reduction

• This regime applies a flat reduction of 50% for expenses on your rental income, covering all expenses without the need for detailed justifications. This allowance is ideal for rents that do not exceed €77,700 per year.

For vacation rentals not classified in a tense zone, the PLF 2024 has caused a significant change by reducing the thresholds of the micro-BIC regime from €77,700 (or up to €188,700 for a classified furnished tourist accommodation) to €23,000.

Thus, classified furnished tourist accommodation has so far benefited from a tax reduction of 71%. However, this situation has recently changed with the PLF 2024 vote. Now, all owners renting seasonally are subject to a 30% discount. These thresholds are applicable to income from 1 January 2024, but new proposals may be voted on by the government during the year.

• Administrative simplicity : fewer administrative and accounting obligations, making this regime accessible for owners who prefer less complex tax management.
• Limitations : less flexibility to deduct real costs that could exceed the lump-sum allowance, which can be a disadvantage if your actual expenses are high. You are taxed on 70% of your gross rent.

Simplified real regime: precision and fiscal optimization

• Deduction of actual expenses : allows the deduction of all real expenses related to the rental activity, such as loan interest, condominium fees, management fees, and above all, the depreciation of the property and furniture.
• Depreciation calculation : the depreciation of real estate and equipment can significantly reduce taxable income, often leading to a deficit that can be carried over to similar income over the following ten years.
• Accounting requirements : requires detailed bookkeeping and the annual submission of a balance sheet, which may require the assistance of an LMNP expert.

If your annual revenue is less than 77,700 euros, micro-BIC can be less expensive in terms of time and money. For higher revenues, or when the charges exceed the 50% reduction, the real regime may be more advantageous.

The simplified real regime is often more beneficial for owners who incur significant expenses in renovating, maintaining or expanding their rental assets.

Real regime: precision and fiscal optimization

If your income under the simplified real regime exceeds €840,000 per year, you switch to the real regime (LMNP). In addition, the LMNP or SCI under the real regime must electronically declare a complete financial statement (tables 2050 and following) attached to forms No. 2031 (IR) or No. 2065 (IS).

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Common preliminary steps for reporting

Before choosing between the micro-BIC and the real regime, it is imperative to gather the necessary documents and to understand the various applicable tax declarations.

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The necessary documents

To start registering as a Non-Professional Furnished Rental Company (LMNP), the first step is to create your business by completing The P0i form online on the site one-stop shop from the INPI website. This step officially declares the creation of your LMNP status and the start of your fiscal activity.

After completing this process, the tax authorities will issue you a SIRET number, thus confirming your status as a Non-Professional Furnished Rental Company (LMNP).

In addition to the P0i form, you are required to complete three other documents when registering:

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P2P4i form

This form allows you to communicate with the administrative services concerning various aspects of your furnished rental business. It is used to declare or change important elements such as the start date of activity, the address, the addition of a new property to your business, or the cessation of your business.

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Quiz 751-SD:

Once you have received your SIRET number, you will also get a 751-SD questionnaire. This questionnaire is intended to provide additional information on your activity as a non-professional furnished rental company, in particular for the declaration of the Corporate Property Tax (CFE).

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Documento 1447:

Form 1447 is pre-filled and allows the tax service to calculate the amount of your Business Property Tax (CFE). If you do not receive this form after returning the 751-SD form, please request it from your tax office. Once completed, you must return it to your Business Tax Department (SIE) according to the address of the rented accommodation.

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Understanding the various tax returns

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P2P4i form:

This versatile form allows you to add a second property to your rental business, to change the start date of activity, the address, or to report the cessation of the activity.

Quiz 751-SD:

You will receive this tax questionnaire with your SIRET number to provide more information about your activity to the administration.

Form 1447:

After completing the 751-SD questionnaire, you will normally receive a pre-filled form 1447 necessary for calculating the CFE (Corporate Property Tax). If you do not receive it, you must complete it and send it to the Corporate Tax Service (SIE) at the location of the rented property.

Declaration 2031-2033:

The 2031-2033 cerfa declaration, also called tax return, is the balance sheet of your activity and is the main element of your simplified Real System (LMNP) declaration. You must complete and send it annually by EDI (Electronic Data Interchange).

Appendix 2042 C Pro:

• Once the tax return has been sent to the SIE, you must complete your Income Tax Declaration (2042) with the result of your LMNP activity appearing on your 2031-2033 cerfa return.
• If you are filing online, report these amounts in the “Income from non-professional furnished rentals” section. For a paper return, attach Schedule 2042 C Pro.

These forms are the core of your fiscal commitment and must be completed carefully to avoid mistakes that could lead to penalties or document checks.

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Reporting under the micro-BIC regime

The micro-BIC regime (Industrial and Commercial Benefits) is frequently chosen by LMNP investors for its simplicity of tax management. It is particularly suitable for owners who generate less than 77,700 euros in gross annual revenue from their furnished rentals. This regime offers a lump-sum allowance that considerably simplifies the calculation of the tax due.

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Calculation of taxable income and examples

Under the micro-BIC regime, taxable income is calculated as follows:

• Revenues received : total of the rents and expenses paid by the tenants during the fiscal year.
• 50% discount : the micro-BIC regime automatically applies a 50% lump-sum allowance (long term rental) for fees and charges, without the need to justify these expenses. This allowance is supposed to cover all rental expenses.

Calculation examples:

If you receive 40,000 euros in annual rent, the lump-sum allowance will be 20,000 euros (50% of 40,000 euros). Your taxable income will therefore be 20,000 euros.

For receipts of 60,000 euros, the allowance is 30,000 euros, leaving a taxable income of 30,000 euros.

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Filing the declaration and deadlines

The declaration of income in LMNP under the micro-BIC regime must be made annually via:

• Form 2042 C PRO : This form must be completed and attached to your standard tax return (form 2042).

The steps to fill out the 2042 C PRO form

For a standard furnished rental, you must fill in boxes 5ND, 5OD or 5PD.

If you have classified guest rooms or furnished tourist accommodations and you are not subject to social security contributions on this rental income (for seasonal rentals generating less than €23,000 or more than €23,000, managed by a real estate professional holding a professional card), you must fill in the 5NG, 5OG or 5PG boxes.

If you own classified furnished tourist accommodation and are subject to social security contributions on this rental income (for seasonal rentals generating more than €23,000), you must fill in boxes 5NW, 5OW or 5PW.

In case of bed and breakfast with social security contributions on this rental income (for seasonal rentals generating more than 23,000€), fill in the 5NJ, 5OJ or 5PJ boxes.

Micro-BIC declaration deadline by zone:

Zone 1 (departments 01 to 19): May 25, 2024

Zone 2 (departments 20 to 54): June 1, 2024

Zone 3 (departments 55 to 974/976): June 8, 2024

Paper declaration (including French residents abroad): May 22, 2024

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Reporting under the simplified real regime

For furnished rental owners looking to maximize their tax deductions, the simplified real regime offers considerable flexibility. This regime makes it possible to report all actual expenses related to the rental activity, which can be particularly beneficial for those who incur significant costs in terms of depreciation, renovation, or management.

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Step-by-Step Reporting Process

When choosing the real regime, you need to prepare a tax package. This corresponds to the income statement that every company must send to its tax department.

For this you need to fill in Form no. 2031-SD when filing your tax return. This form must be accompanied by a balance sheet including an income statement and a depreciation expense deduction table. Here are the elements to be completed in the 2031 declaration (LMNP):

• Your full contact details,
• The date of the fiscal year concerned,
• The choice of taxation regime,
• Box C7, allowing you to enter the result after deduction of expenses (including a possible deficit report),
• Box H of the appendix to the 2031-SD package, which includes the results declared in box C.

In addition to the 2031-SD package, you must also complete the supplementary income tax return no. 2042-C-PRO LMNP for your LMNP activity, similar to the micro-BIC regime. In this document, you must indicate the amount of your profit, that is, the amount received after deduction of expenses.

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Tips for maximizing your deductions

Maximizing your deductions under the simplified real regime requires a thorough knowledge of deductible expense items:

• Depreciation of property and furniture: depreciation is a key advantage of the real regime. Determine the depreciable value of your real estate (excluding land) and furniture, then spread this depreciation over several years.
• Loan interest deductions: Interest paid on loans to buy, build, or improve your home is fully deductible.
• Management and maintenance expenses: all expenses related to the management and maintenance of the property (management fees, cleaning costs, fuel costs, etc.) are deductible.
• Condominium fees and taxes: non-recoverable condominium fees and taxes such as property tax can be deducted.

Consider hiring an LMNP expert if your situation is complex. This can increase your deductible expenses in the short term but optimize your tax situation in the long term.

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Timeline and important deadlines for the LMNP declaration in 2025

The reporting and payment schedule changes little from year to year, but it's always a good idea to check key dates with the tax authority or your tax advisor. Here are the main deadlines for the LMNP declaration in 2025:

Important dates:

• May 18, 2024 : deadline for the electronic declaration of the tax return (Furnished Renters under the real regime) and the tax return in paper format.
• May 25, 2024 : deadline for declaring income online on the site impots.gouv.fr in zone 1 (for departments 01 to 19 + non-French residents).
• May 31, 2024 : option deadline for the real income regime 2024 (letter to exercise the option to switch from micro-BIC to the real regime)
• June 1, 2024 : deadline for declaring income online on the site impots.gouv.fr in zone 2 (for departments 20 to 54).
• June 1, 2024 : deadline for registering with an OGA for the current year.
• June 8, 2024 : deadline for declaring income online on the site impots.gouv.fr in zone 3 (for departments 55 to 976).
• June 30, 2024 : declaration of property mandatory by owners: vacancy tax, secondary residence tax.