Complete guide to LMNP tourism investment

What is LMNP tourism or seasonal?

LMNP tourism refers to the investment in real estate intended for furnished rental in a tourist context. This status is intended for owners who rent furnished accommodation for short periods of time, mainly to tourists or business travelers. Thus, the LMNP tourism represents an interesting investment opportunity for those who seek to combine the fiscal and financial advantages of furnished rentals with the potential of the tourist market, taking into account the location of the property, demand and the potential for profitability.

What are the differences between LMNP Classic and LMNP Tourism?

The Non-Professional Furnished Renter status (LMNP) is divided into several main categories, including the LMNP classical and the LMNP tourism. These two forms of investment are attracting a growing number of investors, eager to benefit from tax advantages and the flexibility offered by furnished tourist rentals. However, despite their similarities, the classic LMNP and the LMNP tourism have distinct characteristics that influence the choice of the investor, the management of the property, and the expected financial results:

Rental target and lease type

• LMNP Classic : targets a varied clientele including students, professionals, or families looking for accommodation for a period of generally one year or more. Leases are often for one year, renewable, or mobility leases (from 1 to 10 months).
• LMNP tourism : intended mainly for tourists, business travelers, or people looking for temporary accommodation. Rentals are generally short-term, often less than one year, and adapted to seasonal needs.

Tax regime and allowances

• LMNP Classic : benefits froma 50% reduction on rental income within the framework of the tax regime” Micro-Bic“. If opted for the diet” BIC-real“, all expenses become deductible, including acquisition costs and depreciation of the property.
• LMNP tourism : offers an even more advantageous discount:

For classified furnished tourist accommodation located in a tense area: 71% reduction for a turnover ceiling of €188,700.

For classified furnished tourist accommodation located outside the tense area: 92% reduction for a turnover ceiling of €188,700 (71% + 21% depending on turnover).

For unclassified furnished tourist accommodation, located in a tense area and outside a tense area: Regardless of the geographical area, the reduction for renters is now reduced to 30% reduction for a turnover ceiling of €15,000.

Concerning the parahotel sector and bed and breakfasts : 71% reduction for a turnover ceiling of €188,700.

As with the classic LMNP, the diet” BIC-real ” allows the deduction of a wider range of expenses.

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Income Potential

• LMNP Classic : generates stable rental income, but potentially lower compared to short-term rentals, due to fixed monthly rates.
• LMNP tourism : Offers higher income potential due to the possibility of higher daily or weekly rates in times of high tourist demand. The rental vacancy is by construction more important in LMNP tourism or seasonal.

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Flexibility and management

• LMNP Classic : less flexibility in terms of pricing and tenant rotation, but offers simpler management and rental stability.
• LMNP tourism : requires more dynamic management to adapt to seasonal variations, last-minute booking requests, and more frequent tenant rotation and increasing expectations.

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Why choose LMNP for tourist rentals?

Furnished rentals, and more particularly LMNP tourism, are experiencing growing interest from both owner-investors and tenants. This form of rental meets a growing demand for “turnkey” living accommodation, offering simplicity, comfort and modern equipment. In fact, furnished rentals represent 57% of rental offers in France, thus demonstrating its attractiveness on the real estate market.

One of the main advantages of the LMNP for tourist rentals lies in its attractive taxation. The simplified BIC Réel regime is particularly suitable for furnished rentals, making it possible to deduct acquisition costs and establish a sustainable deficit that is far from taxes. This possibility of deduction, combined with depreciation, can in most cases erase rental income for tax purposes, making the investment particularly profitable.

Finally, LMNP tourism makes it possible to target a specific market, offering atypical rental opportunities that can be very profitable. Whether it's cottages, guest rooms, or properties located in attractive locations, LMNP tourism or Seasonal LNMP opens the door to a variety of rental options, attracting a diverse clientele looking for unique experiences.

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The advantages of investing in LMNP tourism

Investing in LMNP (Non-Professional Furnished Rental Company) tourism has multiple advantages, particularly in terms of taxation and finance, as well as in terms of flexibility and income potential. Here is a detailed overview of these benefits:

Tax and financial advantages

• Higher allowances : As part of the tax regime” Micro-Bic“, the discount rates vary from 30 to 91% for furnished rentals classified as tourism.
• “Real” tax regime : This regime allows the deduction of a wide range of expenses, including acquisition costs, as well as the depreciation of buildings and works. These deductions can significantly reduce the tax on rental income, thus offering increased financial profitability.

Flexibility and revenue potential

• Flexibility for renters : Furnished rentals offer more flexibility in terms of lease term, which is particularly advantageous in the context of tourist rentals. This flexibility is perfectly suited to the needs of tourists and business travelers.
• Increasing demand : Furnished rentals are becoming increasingly popular, with demand that has doubled in 5 years.

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Property types in LMNP tourism

Good for Airbnb rentals

Real estate for rent on platforms like Airbnb is often located in urban areas with high tourist demand. They are generally small to medium-sized (T1 to T3) and should be attractive and well-equipped to attract a diverse clientele, including tourists, traveling professionals, and sometimes students or families. These properties require active management and flexibility to adapt to the demands of short stays. Some local regulations impose constraints.

Property for seasonal rentals: bed and breakfast and cottages

Bed and breakfasts and cottages are popular options for vacation rentals, especially in rural areas or in regions with high tourist attractiveness. These properties offer a more personalized and intimate experience, often with direct contact between hosts and tenants. They can vary in size and style, ranging from small family guesthouses to larger group lodgings.

Classified tourist accommodation

Classified furnished tourist accommodations are furnished rentals that have been officially classified by an accredited organization. This classification ensures a certain level of comfort and services, and may include apartments, houses, or studios. The ranking helps to reassure tenants about the quality of accommodation and can allow owners to benefit from additional tax advantages.

Tourist residence

Tourist residences are separate establishments, offering hotel services and leisure facilities. They are generally located in attractive tourist areas and are designed to accommodate tourists for short stays. These establishments offer professional management and services such as reception, cleaning, and sometimes catering. A commercial lease is then signed between the owner and the operator, the latter ensuring all management.

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Choosing the type of property in LMNP tourism according to your objectives

The choice of the type of property in LMNP (Non-Professional Furnished Rental) tourism must be made according to your investment objectives, the location of the property, and your management strategy. Here are some key considerations for choosing the type of property that best suits your LMNP tourism goals:

Good for Airbnb rentals

• Objectives : maximize profitability by exploiting the demand for short-term rentals.
• For whom? : suitable for investors who want flexibility in managing rentals and who are ready to adapt to fluctuating demand.
• Benefits : high income potential, flexibility in rates and length of stay, wide customer reach via online platforms.
• Disadvantages : The taxation of this type of investment is being discussed again to be less competitive than before. Local authorities are increasing the supervision of this activity.

Property for seasonal rentals: bed and breakfast and cottages

• Objectives : offer a personalized and intimate experience in places often located in rural or tourist areas.
• For whom? : ideal for investors who value direct contact with customers and want to offer a more authentic experience.
• Benefits : opportunity to create a unique experience for visitors, potential for customer loyalty, often located in areas with high seasonal demand.
• Disadvantage : Strong seasonality of tourist activity.

Classified tourist accommodation

• Objectives : ensure a level of comfort and certified services to attract customers who are looking for quality standards.
• For whom? : suitable for investors who aim for a more upscale market and who are ready to maintain high standards.
• Benefits : official classification reassuring for customers, possibility of higher rates, increased attractiveness thanks to certified quality.
• Disadvantages : a time-consuming classification procedure.

Tourist residence

• Objectives : invest in a property that offers hotel and leisure services, with fully delegated professional management.
• For whom? : ideal for investors looking for a “turnkey” investment with no daily management.
• Benefits : professional services, maintenance and management taken care of, attractiveness for tourists.

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How to manage a property in LMNP tourism?

Successful investment in LMNP tourism requires rigorous and strategic management of the property. Whether you are new to the field of furnished rentals or an experienced investor looking to optimize your real estate portfolio, understanding how to effectively manage a property in LMNP tourism is essential to maximize its profitability and ensure its sustainability.

• Direct or delegated management : decide whether you are going to manage the property yourself or entrust it to a professional manager such as a concierge. Each option has time, cost, and effort implications.

• Tenant rotation : in LMNP tourism, tenants change frequently. Be ready to actively manage the tenant departure and arrival process, which includes preparing housing, verifying tenants, and managing reservations.
• Revaluation of rents : take advantage of the frequent change of tenants to reassess the rents, respecting the legal rules related to the location of the property.

• Accounting management : The LMNP accounting may be more complex. Consider using a real estate tax service like Qlower. Choose between the micro-BIC option or the Real regime depending on your situation and your goals.
• Assessment of economic and tourist attractiveness : analyze the attractiveness of the geographical area to ensure good profitability. Integrate this into your rental strategy, for example by choosing a mixed rental that combines the advantages of traditional and tourist rentals.

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Our advice to optimize the occupancy of your property in LMNP tourism

Choosing the right location: the rental vacancy depends greatly on the location of the accommodation. Prefer properties located in hypercenters or in areas with high economic, cultural and tourist attractiveness to maintain high occupancy.

Rental strategy: consider a mixed rental, alternating between classic rentals (for example for students or young professionals) and tourist rentals. This strategy offers flexibility and can optimize occupancy throughout the year.

Renovation and maintenance : keep the property in excellent condition with regular renovations and quality maintenance and equipment. A property that is carefully maintained and attractive is more likely to stay busy and often rent at high prices.

Marketing and advertising: publish your property on popular rental platforms such as Airbnb, Booking, or Abritel to reach a large audience. High-quality photos and detailed descriptions can increase the attractiveness of your listing.

Flexible pricing : adapt your rates according to seasonality and local events to maximize occupancy and revenue.

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How to calculate the profitability of a property in LMNP tourism?

Calculation of rental income : estimate the amount of rent that you can reasonably ask for your property. Consider the location, the quality of the renovation, and the rates of similar rentals in the area.

Taking into account deductible expenses : Include deductible expenses, such as management fees, maintenance, loan interest, and other rental-related expenses in your calculations.

Calculation of net annual profit : Calculate the net annual profit by subtracting deductible expenses from your rental income. Net profit can be calculated and compared to other investment options.

Taking depreciation into account : In LMNP, the depreciation of property and furniture can be deducted, which reduces the tax base and influences net profitability. A tax advisor can help you plan these depreciations to optimize your taxation.

Choice of tax regime : the tax regime (Micro-Bic (or Real BIC) has a significant impact on profitability. The simplified BIC Real regime is often optimal for LMNP because it allows depreciation and other expenses to be deducted.

Assessment of net profitability after tax : calculate net profitability taking into account taxes and social security contributions, according to your marginal tax bracket.

In conclusion, the tourism or seasonal LMNP is an attractive option to maximize your real estate investment, offering significant tax advantages, management flexibility, and high income potential. However, success in this field requires not only a thorough understanding of the market and regulations, but also the careful and close management of your property.