The real regime of the LMNP status (Non-Professional Furnished Rental) is an excellent lever to reduce tax on your rental income. Unlike unfurnished rentals or Micro-BIC, it allows you to deduct all actual expenses and depreciate the property and furnishings.
Why choose the real regime in LMNP?
Real regime or Micro-BIC: what are the differences?
When you declare your rental income from furnished property, you have the choice between two tax regimes: the Micro-BIC or the simplified real regime.
The Micro-BIC is the simplest solution from an administrative perspective. You declare your gross rents (including charges) and the tax administration applies a flat-rate deduction of 50% (or 71% if your property is classified as furnished tourist accommodation). Therefore, you have no real charges to justify.
The real regime, on the other hand, is a bit more demanding as it requires you to keep accounts, but it is often much more financially interesting: all your actual charges are deducted, as well as the depreciation of the property and furniture. In many cases, this allows you to neutralize a large part, if not all, of the taxable rental income.
Example:
If you receive €12,000 in annual rents, the Micro-BIC allows you to deduct a fixed allowance of €6,000. With the real regime, if your charges and depreciation exceed these €6,000, you are in profit! This is very common, especially if you have incurred acquisition costs, a loan, or significant work.
Tax advantages of the real regime for landlords
The main advantage of the real regime is that it reflects the reality of your expenses. You can notably:
Deduct all your actual charges: management fees, repairs, insurance, loan interest, property tax, etc.
Depreciate each year a portion of the value of your real estate, excluding land, as well as furniture and equipment.
Possibly generate a carryforward deficit (excluding the depreciation portion) that will reduce your future profits.
De nombreux investisseurs LMNP parviennent à neutraliser leur revenu locatif imposable pendant de nombreuses années grâce à l’amortissement. Ce levier fait du LMNP une véritable niche fiscale.
What expenses can be deducted in LMNP?
List of deductible current charges
To be profitable, a rental investment must be well-managed and properly reported. With the actual LMNP system, all expenses directly related to furnished rental activity are potentially deductible. Here is a non-exhaustive list of expenses you can record in your accounting:
Insurance premiums for non-occupying owners and possibly insurance for unpaid rents.
Homeowner association fees paid for the maintenance of common areas, the elevator, etc.
Maintenance and minor repair costs, such as plumbing, painting, or replacement of equipment.
Utility bills (electricity, gas, Internet), if they remain your responsibility.
Rental management fees if you entrust the management to a real estate agency.
Advertising, listing, and tenant change fees.
Loan interest and banking fees related to the mortgage.
Property tax, as well as the Business Tax Contribution (CFE), mandatory for landlords.
Notary fees for the acquisition can be accounted for as expenses over several years (by amortization).
Travel expenses or mileage allowances for managing the property.
Accountant fees and specific software for LMNP.
To maximize your deductions, it is essential to keep everything: estimates, invoices, receipts. These documents may be requested in case of a tax audit.
What conditions must be met to deduct a charge?
For a charge to be considered d deductible, it must meet certain conditions:
Be justified by an invoice or an official document.
Be necessary for operating the furnished rental property.
Be actually paid and dated after the start of activity.
Be proportionate and reasonable in relation to the amount of rents.
The notary fees or the major renovations (heavy renovation, creation of a room, structural changes…) are most often capitalized: they are not deducted all at once, but depreciated over several years. Hence the importance of good accounting management.
How does depreciation work in LMNP?
Depreciating the Property: Method and Duration
Depreciation is the secret weapon of the real regime: it allows you to recognize, each year, a loss of accounting value of the rented property. This loss is deductible from your rental income.
In practice, the value of the property is broken down as follows:
The land does not depreciate. Its value is estimated at 10% to 30% of the total price, depending on the location.
The main building (walls, structure) is depreciated over 30 to 40 years.
Technical elements: roofing, electricity, plumbing… over 10 to 20 years.
Interior improvements: partitions, floors, joinery, can be depreciated over 10 to 15 years.
Example: you buy a studio for €150,000, of which 20% is for the land. The depreciable base is therefore €120,000.
Depreciating Furniture and Renovations
The furniture is also depreciable: sofa, bed, appliances, lights, dishes… The duration is generally 5 to 10 years, as wear is faster.
Example: you furnish your apartment for €8,000 of furniture and appliances. If you depreciate these over 8 years, it allows you to deduct an additional €1,000 per year.
The same goes for certain major renovations: creating a bathroom, changing a complete kitchen… These expenses can be depreciated over 10 to 15 years, depending on their nature.
Thanks to depreciation, many LMNP lessors significantly, even completely, reduce the taxable profit of their furnished rental for several years.
Some important reminders
The LMNP depreciation cannot create carryforward losses, but the excess depreciation is carried over from year to year and will be deducted from your future profits.
Since the 2025 reform, upon the resale of a furnished rental property under the actual regime, the capital gain is calculated taking into account the depreciations already applied.
Specifically, these depreciation deductions reduce the acquisition cost, which increases the taxable capital gain. Thus, the depreciated portion is no longer exempt from tax upon resale.
Conclusion
The actual LMNP regime is one of the preferred tax solutions for investors in furnished rentals. Thanks to it, you can deduct all your actual expenses, depreciate your real estate and your furniture, and thus maximize your tax optimization.
Thus, for many years, you have been collecting your rents while paying little or no tax.
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