The Keys to LMNP Status in 2025 to Maximize Your Profitability

What is LMNP status?

The LMNP (Non-Professional Furnished Rental) status is an advantageous French tax status for owners who rent furnished real estate. Here are some key figures and important characteristics of this status:

• Income ceiling : To benefit from LMNP status, annual rental income must not exceed a certain ceiling. In 2025, this ceiling is the combination of the following 2 conditions:

— Limit of 23,000 euros in furnished rental income per year

- Furnished rental income must remain lower than other household incomes.

• Tax regime : Rental income received under the LMNP is taxed in the Industrial and Commercial Profits (BIC) category. Owners can choose between two tax options: the lump-sum deduction on income (the deduction rate varies from 30 to 71% depending on the rental method and location), or the simplified real regime, which allows you to deduct the actual expenses related to the rental and to deduct in addition the depreciation of the rented property.

• Tax benefits : The choice of taxation regime may depend on the amount of revenue and expenses borne by the owner. The 50% lump-sum allowance for long-term rentals can be particularly advantageous for owners who have low expenses (no credit, no co-pro, old purchase) or who have already depreciated their property. On the other hand, the Simplified real BIC regime allows a more accurate deduction of real expenses and adds depreciation of the property, which is in most cases more advantageous for the majority of owners.

• Accessibility and attractiveness : LMNP status is attractive for many investors because of its ability to generate additional income while benefiting from advantageous taxation. This makes furnished rental investment accessible to a wide range of investors, whether they are new to real estate or experienced.

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What is the point of LMNP status?

The advantage of the LMNP status lies in its numerous tax advantages and flexibility, offering an attractive opportunity for real estate investors. Here are a few additional points to flesh out this passage:

• Beneficial tax management : The LMNP allows investors to benefit from advantageous tax management of rental income. The possibility of choosing between the lump-sum allowance and the real regime offers flexibility to optimize taxation according to your situation and to significantly limit the tax on rental income.
• Tax reduction : Opting for the simplified real regime allows investors to deduct real expenses related to the rental, such as acquisition costs (notary and agency), loan interest, management fees, works, and other expenses related to the rental. We also deduct the depreciation of the property, calculated by a professional. It is this additional deduction that makes all the difference. Generally, the tax on rental income is completely eliminated under the real regime (in 90% of cases), thus increasing the net after-tax profitability of the investment.
• Simplicity of management : The LMNP offers simplicity of management compared to other more complex tax regimes. For example, the lease is for 1 year and not 3 years in a bare rental. Reporting requirements are very simple at Micro BIC regime, but more complex than BIC Réel and require the assistance of a professional. This delegation at a limited cost (counting €240 with Qlower) allows investors to devote less time and effort to the administrative and fiscal management of their real estate investments.
• Protection of personal assets : Under LMNP status, the investor benefits from personal asset protection. In the event of financial difficulties related to real estate investment, creditors generally cannot seize the investor's personal assets, thus limiting financial risks.
• Accessibility : The LMNP offers a relatively accessible entry into furnished real estate investment. Investors do not need to have previous experience in the real estate sector to benefit from this status, which makes it attractive for beginners looking to diversify their investment portfolio.
• Diversifying the investment portfolio : The LMNP allows investors to diversify their portfolio by adding furnished real estate assets. This diversification contributes to reducing risks and stabilizing overall portfolio returns, by offering a stable and predictable source of additional income to investments in other asset classes.

By combining these advantages, the LMNP is positioned as an attractive option for those looking to generate additional income while benefiting from advantageous taxation and simplified management of their real estate investment.

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What are the conditions for obtaining LMNP status in 2025?

To obtain LMNP status, several conditions must be met:

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Owner conditions:

• Rental of a furnished property : To benefit from LMNP status, the owner must rent a furnished property. This means that the home should be equipped with furniture and equipment necessary for daily life, such as bedroom furniture, household appliances, and kitchen utensils. A precise list is proposed by the Government here: https://www.service-public.fr/particuliers/vosdroits/F34769
• Not classified as a professional: The owner should not be classified as a furnished rental professional. This implies not meeting the criteria specific to the status of Professional Furnished Rental Company (LMP). The criteria to be considered an LMP include in particular the achievement of rental income in excess of 23,000 euros per year and representing the majority of the total income of the fiscal household, as well as registration in the Commercial and Companies Register as a professional renter.

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The conditions concerning the real estate

• Furnished and equipped : The rental property must be furnished and equipped in such a way as to offer a sufficient level of comfort to allow the tenant to live there independently as soon as he moves in. This typically includes essential furniture such as beds, wardrobes, cabinets, tables, and chairs, as well as household appliances such as refrigerators, stoves, and washing machines.
• Minimum comfort : The property must offer a minimum level of comfort in accordance with the usual standards of furnished rentals. This means that the accommodation must be in good condition, clean and secure, with working equipment and facilities that meet current safety standards.
• Tenant autonomy : The property must allow the tenant to live independently as soon as they move in, without the need to bring additional equipment or carry out major work. The objective is to provide the tenant with a livable and functional environment from the start of the rental, thus facilitating their installation and daily comfort.
• The list of furniture and equipment is specified here by the Government. https://www.service-public.fr/particuliers/vosdroits/F34769

This list has been stable for several years.

The ceiling conditions

• Limited annual revenue : The annual revenue generated by furnished rentals must not exceed a certain threshold determined by French tax legislation. In 2025, this ceiling is set at 23,000 euros per year, calculated in proportion to the rental period. If this threshold is adjusted, your tax advisor will notify you.
• Distinction between non-professional and professional activities : These ceiling conditions aim to clearly distinguish non-professional furnished rental activity from that carried out in a professional capacity. By staying below the fixed income threshold, owners can benefit from the advantageous tax regime of the LMNP, which offers significant advantages in terms of taxation mainly.

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What are the benefits of LMNP status?

LMNP status offers several significant advantages for investors:

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Attractive taxation

• The LMNP tax regime, based on Industrial and Commercial Profits (BIC), offers considerable tax advantages. Rental income is taxed in the BIC income category, thus offering more advantageous taxation compared to other tax regimes.
• The possibility of opting for the simplified real regime allows owners to deduct the actual expenses related to the rental, including the depreciation of the property. This deduction most often leads to a significant reduction in the tax on rental income, up to the point of total erasure, thus increasing the net after-tax profitability of the investment.

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VAT recovery

Under LMNP status, it is sometimes possible to recover VAT on the purchase of real estate, in particular for properties intended to be used as service residences such as student, tourist or senior residences. This recovery can significantly reduce the initial investment required, thus improving the overall profitability of the investment. Attention, this investment is then called “managed furnished”. Management is then fully delegated via a commercial lease to a manager. The good maintenance of the home depends entirely on the solidity of the manager. This VAT recovery procedure remains complex and requires the assistance of specialized professionals to ensure that all conditions are met.

For seasonal rentals, the allowances are revised according to the location of the property, at 30%, 50% or 71%.

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Lump sum allowance

Under the LMNP micro-BIC regime, investors benefit from a lump-sum reduction on their rental income. In 2025, following the tax changes decided at the beginning of the year, the allowance depends on the type of rental and the location of the home.

• For long-term rentals, the lump-sum allowance is 50%. The investor is then taxed on 50% of his rental income, without deduction of any charge
• for seasonal rentals (not classified), the lump-sum allowance is reduced in 2025 to 30%. The investor is then taxed on 70% of his rental income, without deduction of any charge
• for seasonal rentals (classified as tourism), the lump-sum allowance was maintained in 2025 at 71%. The investor is then taxed on 29% of his rental income, without deduction of any charge

The Micro BIC option is only possible for direct ownership, excluding joint ownership. In Indivision, the Simplified Real BIC regime is mandatory.

The Micro BIC option must remain under certain ceilings that were drastically reduced in 2025.

• This ceiling is €77,700 in 2025 for long-term furnished rentals
• This ceiling is €15,000 in 2025 for unclassified seasonal rentals
• This ceiling is €188,700 in 2025 for classified vacation rentals.

This measure simplifies tax reporting by reducing the tax base, which results in a significant reduction in the tax due on rental income. It is an attractive option for those looking for simplified tax management and who have few expenses to deduct. Note that in most cases, the Real BIC regime is still more effective. A simulation by the Qlower team can help you choose the best tax option for your furnished rental real estate investments.

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No social security contributions

An advantageous characteristic of LMNP status is the exemption of income from social security contributions. Unlike other forms of income, the income generated by the LMNP is not subject to social security contributions, which contributes to increasing the net return on investment. This absence of social security contributions allows investors to keep a greater part of their rental income, thus reinforcing the financial attractiveness of LMNP status.

Note that when the rental income ceilings are exceeded, the LMP regime applies and the income is then subject to social security contributions.

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Flexible management

The management of a property in LMNP offers significant flexibility for owners. This flexibility is reflected in the possibility of choosing tenants and setting rents according to local market conditions in compliance with rent limits for controlled rent areas (for long-term rentals). In addition, investors under LMNP status have the freedom to manage their real estate according to their personal preferences and investment goals, which allows them to adapt effectively to market changes and the needs of tenants. This flexible management, directly or entrusted to a property administrator, allows owners either to delegate management or to optimize the profitability of their rental real estate investments.

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Protection of personal assets

The LMNP status provides protection for the personal assets of investors. Indeed, this regime makes it possible to clearly separate the assets invested in the rental business from the personal assets. This separation ensures that, in the event of financial difficulties related to the rental business, creditors will not be able to seize the investor's personal assets to settle debts related to real estate investment. Thus, the LMNP status offers peace of mind to investors by providing them with protection against financial risks while allowing them to develop their rental business safely.

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What are the disadvantages of LMNP status?

While LMNP status offers numerous benefits, it also has some disadvantages to consider:

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Accounting complexity

Accounting management at the BIC Réel requires professional support. Accounting requires careful and accurate monitoring of revenue and expenses related to rental activity. Under the real regime, owners must document all financial transactions in detail, which may require time and specific accounting skills to maintain accounting in accordance with current tax and legal standards. Using a tool like Qlower greatly simplifies this accounting monitoring, but requires owners to be rigorous in their financial management to ensure compliance and optimize their profitability.

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Significant initial investment

The acquisition and development of a furnished property generally require a significant initial investment. In fact, in addition to the cost of buying the property itself, owners often have to plan for additional expenses for the equipment and furniture needed to rent out furnished rentals. These expenses include the purchase of furniture, appliances, decorative items, and other important amenities to provide a level of comfort and convenience for renters. Therefore, potential investors should be prepared to raise additional funds to the purchase to finance these initial expenses and ensure that their property is ready to be rented under the best conditions.

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Rental risks

LMNP landlords face various risks inherent to the rental business, such as rental vacancies and unpaid rent. The rental vacancy, where the property remains unoccupied for extended periods of time, mechanically leads to a decrease in rental income and affects the profitability of the investment. Likewise, unpaid rent represents a financial risk for landlords, and requires expensive and time-consuming recovery procedures. It is therefore essential for LMNP owners to put in place effective strategies to minimize these risks, such as the careful selection of tenants, the regular monitoring of the rental market and the establishment of effective unpaid management policies such as an Unpaid Rent Guarantee, Legal Protection Insurance. By actively anticipating and managing these risks, owners can protect their investment and maximize long-term profitability.

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Limiting the deduction of deficits

One aspect to take into account in the LMNP status is the Limiting the deduction of deficits. Unlike other tax regimes, deficits generated by LMNP activity cannot be deducted from the taxpayer's overall income. Deficits are carried over to the following year. This restriction may limit tax benefits in case of large expenses or periods of low profitability. Indeed, LMNP owners cannot use accumulated deficits to reduce their taxable income in other areas. Deficits of one year are carried forward for a period of 10 years when they result from expenses, and without a term limit when they result from amortization.

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Regulatory Obligations

Owners under LMNP status must comply with a specific formalist. Each furnished rental property must be registered with a SIRET number with the INPI. Local authorities (regions, town halls) are gradually adding additional local constraints. These constraints are most often aimed at limiting seasonal rentals, but as a side effect, sometimes impact traditional furnished rentals.

LMNP owners must also keep up to date with legislative and regulatory developments in the field of furnished rental real estate, which requires constant vigilance and regular updating of their practices and procedures. By ensuring compliance with these regulatory obligations, owners can avoid potential sanctions and ensure that their LMNP business operates and complies.

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Taxation in case of resale

An important aspect to consider as part of the LMNP status is the applicable taxation in case of resale of the property. Indeed, the capital gains made during the sale of the property are subject to income tax, which can have a significant impact on the profitability of the investment in the long term.

In 2025, the calculation of capital gain does not take into account depreciation deducted, which minimizes taxable capital gain. When selling an LMNP property, the difference between the sale price and the purchase price, plus any costs associated with the transfer (such as real estate agency fees or notary fees), constitutes the taxable capital gain. This capital gain is then subject to the progressive income tax scale, with the possible application of an allowance for length of ownership, which reduces the tax to be paid according to the length of ownership of the property. After 30 years of ownership, no tax is due on the observed capital gain.

However, despite the possibility of allowances for duration of ownership, taxation in the event of resale may nevertheless reduce the net return on investment in the long term. It is therefore important for LMNP investors to take this fiscal dimension into account in their investment strategy and to foresee the possible tax consequences when selling their real estate. By carefully planning their exit from the investment with Qlower experts, LMNP owners can optimize their profitability and minimize the impact of taxation on their capital gains.

LMNP owners must also keep up to date with legislative and regulatory developments in the field of furnished rental real estate, which requires constant vigilance and regular updating of their practices and procedures. By ensuring compliance with these regulatory obligations, owners can avoid potential sanctions and ensure that their LMNP business operates and complies.

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How do I get LMNP status quickly?

Here's how to get LMNP status quickly:

• Check the requirements: Make sure that you meet all the requirements necessary to benefit from LMNP status, especially with regard to the type of property rented and the amount of rental income.
• Declare your activity: Register your furnished rental activity with the INPI to obtain a SIRET number, which is essential to legally operate as an LMNP.
• Choose the best tax regime: Opt for the tax regime adapted to your situation, whether either the micro-BIC or the real BIC. This decision will have an impact on how you report your rental income and on the tax benefits you can benefit from. Ask the Qlower experts for a simulation.
• Report your rental income: When declaring rental income tax, have a professional accompany you at BIC Réel. This will involve completing specific forms related to Business Property Assessment and providing detailed information on your rental income and expenses.
• Keep your accounts up to date: Keep accurate and up-to-date accounting of your financial transactions related to the LMNP activity with software like Qlower. This will help you meet your accounting and tax obligations and facilitate the management of your real estate investment.

By following these steps and complying with the legal and fiscal obligations associated with LMNP status, you can quickly obtain LMNP status and bring your furnished rental business into compliance with current regulations.