When discussing the status of a non-professional furnished rental landlord (LMNP) under the Real regime, the term “amortization” often arises as a key advantage of this system. In accounting, amortization refers to recognizing the depreciation of an asset over time. It is a purely accounting charge (not an actual cash outflow) that is tax-deductible, similar to actual expenses.
What are the advantages and disadvantages of amortization? How does it work? 🧐 This article aims to explain these aspects.
Under the Real regime, LMNP landlords can deduct both actual expenses paid and the amortization of their property. Unlike expenses such as repairs or loan interest, amortization doesn’t involve actual cash outflow. This accounting charge adds to other deductible expenses, all of which reduce the rental income for tax calculation purposes.
Amortization is often a significant deductible expense, allowing landlords to offset taxable income from the rental property. Consequently, the Industrial and Commercial Profit (BIC) is substantially reduced and often results in a deficit.
Depending on your situation, amortization can enable you to avoid paying income tax on rental income for many years. You can request a simulation from the Qlower team or your accountant to determine your rental income and associated taxes, helping you compare options between the Real regime and Micro-BIC.
Calculating amortization typically requires professional assistance, such as an accountant or accounting software, due to its complexity. The process involves breaking down various components of your property and determining the amortization period for each, leading to the annual amortization amount you can apply.
It’s crucial to maintain ongoing accounting records. Engaging a professional also significantly reduces the risk of tax reassessment.
Accountants follow an “amortization doctrine” (spanning up to 50 years for certain components) to calculate the deductible charge, which adds to other deductible expenses.
Amortization charges are expenses exceeding €600 including tax, notably:
Experience shows that, in most cases, opting for amortization under the Real regime is significantly more advantageous than Micro-BIC (though the latter is commonly used by investors for its simplicity). Combined with other actual expenses, amortization can substantially reduce the taxable income, often eliminating it entirely, thereby avoiding income tax on rental income for an extended period.
Decomposing a property and selecting an amortization period require accounting expertise, often necessitating professional assistance. Engaging a professional is a wise precaution. The Qlower team calculates the applicable amortization based on your situation (or incorporates amortizations already calculated by your accountant) and integrates it into your accounting under particularly advantageous conditions.
For online LMNP declarations without going through a traditional accounting firm, it’s recommended to use specialized software for rental income declarations, such as Qlower.
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