The non-professional furnished rental is often perceived as a flexible, accessible, and advantageous tax regime. However, many landlords discover late the existence of a specific local tax: the business property tax. In LMNP, the CFE regularly raises misunderstandings, particularly regarding its mandatory nature, its calculation method, or the possible exemptions.
The payment of the CFE in LMNP
The principle of accountability according to the activity
The business property tax is based on a simple principle: any person who engages in a non-salaried professional activity on January 1 of the tax year is generally liable for the CFE. Contrary to a widespread belief, the "non-professional" nature of the LMNP status does not automatically exempt from this tax. In tax law, furnished rental is treated as a commercial activity, even when exercised as a secondary activity or with modest income.
This point is central to understanding the logic of the tax administration. Once a dwelling is regularly rented furnished, with the intention of generating income particularly for rental investment, the activity falls under the scope of the CFE. It does not matter whether the lessor is also engaged in salaried work or only spends little time managing the property. Therefore, it is not the social status of the lessor that triggers the CFE, but the nature of the activity performed.
Cases where the business property tax applies
In practice, the CFE applies in the majority of furnished rental situations. An investor who rents a furnished apartment for the year, a studio intended for students, or a property rented under a mobility lease is, by default, concerned. The administration considers that these rentals constitute a commercial operation as long as the property is sufficiently equipped to allow immediate occupancy.
The CFE also applies when the activity generates little income or even an accounting deficit. The amount of the contribution is not linked to the tax result, but to specific bases defined by the municipality. Thus, an LMNP who depreciates their property heavily and pays no income tax may still receive a notice of CFE. This dissociation between income tax and local taxation is a frequent source of misunderstanding among landlords.
Situations where the CFE is not due
Some situations, however, allow one to completely escape the business property tax. The most well-known concerns the furnished rental of a part of the landlord's principal residence, provided that the tenant establishes their principal residence there and that the rents remain within reasonable limits. In this specific case, the tax administration considers that the activity does not have a sufficient professional character to justify the CFE.
There are also cases where the activity is considered occasional or ancillary to the point of not constituting a taxable operation. These situations remain marginal and should be assessed with caution. In case of doubt, the administration tends to adopt a broad interpretation of the notion of professional activity, which explains why many LMNPs find themselves claimed for the CFE after only a few years of operation.
The role of the municipality and the rental location
The CFE is a local tax, which means that the municipality plays a key role in its application. It is the municipality where the rented property is located that is competent to establish and collect the contribution. Thus, an LMNP may be liable for several CFEs if they operate furnished rentals in different municipalities.
Each municipality freely sets certain parameters, including the amount of the minimum CFE base. This autonomy explains the sometimes significant discrepancies observed between two comparable cities. The same rented furnished property can result in a very different CFE depending on its location, regardless of its rental level or actual profitability.
The calculation of the amount of the business property tax
The base retained when renting furnished
The calculation of the business property tax contribution is generally based on the cadastral rental value of the properties used for the activity. In the case of a non-professional furnished rental (LMNP), this notion is often theoretical, as the landlord does not personally use the housing for their activity. In practice, the administration frequently retains a minimal base rather than a real rental value.
This minimal base corresponds to a fixed flat amount set by the municipality, based on a revenue bracket. For the majority of non-professional furnished landlords, it is this minimal base that serves as the basis for calculating the CFE. It allows the community to collect a contribution even when the activity occupies little space or does not mobilize professional premises in the classic sense.
The minimal share and its triggers
The minimal share of CFE applies when the rental value of the property is deemed too low or difficult to determine. It is almost systematic for LMNPs, especially those renting one or two units without a dedicated space for their activity. The triggering of this minimal base does not depend on a profit threshold but on the existence of the activity as of January 1st.
The amount of this minimal base varies significantly from one municipality to another. Some municipalities apply a very low base for small landlords, while others retain higher amounts, sometimes perceived as disproportionate in relation to the income generated. This local variability is one of the main challenges of the CFE in LMNP.
The elements that cause CFE to vary from one city to another
Several factors explain the discrepancies in CFE between municipalities. The first is the amount of the minimal base voted by the municipal council. The second is the tax rate applied to this base. These two combined parameters can lead to an annual CFE of a few tens of euros in some rural municipalities, compared to several hundred euros in tightly populated urban areas.
Sometimes additional taxes voted by public intercommunal cooperation establishments are added to this. The LMNP then finds itself subject to a composite local taxation, the clarity of which is limited. This complexity reinforces the interest in anticipating the CFE as soon as a property intended for furnished rental is acquired.
Possible exemptions for a furnished renter
Exemptions Related to Renting a Part of the Residence
One of the most favorable exemptions concerns the furnished rental of a part of the primary residence. When the landlord rents a room or a space integrated into their own housing, and the tenant resides there as their primary residence, the CFE is not due. This exemption aims to avoid penalizing cohabitation practices or accessory renting.
This situation is common in large university cities, where owners rent a room to a student. As long as the conditions are met, particularly regarding primary residence and reasonable rents, the tax administration does not demand corporate property tax.
Exemptions Related to the Nature of the Rented Property
Some properties benefit from specific exemptions due to their nature. Furnished rentals located in classified areas, notably in rural revitalization zones, may sometimes benefit from reductions or temporary exemptions. However, these measures are regulated and subject to strict conditions, which vary according to prevailing laws and local decisions.
It is important to emphasize that these exemptions are not automatic. They often require a declarative approach from the LMNP, who must report their particular situation to the tax administration within the specified deadlines.
Exemptions Related to the Level of Activity and Revenue
Contrary to a persistent belief, a low revenue does not, by itself, exempt from CFE. However, some municipalities have established exemptions or reduced minimum bases for very small activities. These measures remain local and depend entirely on municipal deliberations.
Moreover, the first year of activity is generally subject to a CFE exemption. This rule also applies to LMNPs. It allows for starting a furnished rental activity without immediately bearing this tax burden, provided that the creation of the activity is duly declared.
Particular Cases of Tourist Rentals
Tourist rentals occupy a special place in the CFE regime. When classified, certain exemptions or reductions may apply, particularly in municipalities wishing to encourage tourist offerings. Conversely, in highly touristic areas, municipalities can apply high minimum bases to regulate the activity.
The classification of the rental and its mode of operation thus play a crucial role. An LMNP renting a property for short durations must be particularly vigilant on this point, as the CFE can represent a significant burden in the overall economic model.
Steps to Take to Obtain the Exemption
CFE exemptions are almost never automatic. The furnished rental provider must take declarative steps, notably through the initial CFE declaration form. It is on this occasion that they can report a situation granting entitlement to exemption, such as renting a part of the primary residence.
In the absence of action, the administration will default to applying the CFE. It is therefore essential to be proactive and keep the necessary supporting documents, as a late exemption may require a claim procedure to obtain a tax relief.
The exploitation choices that change the CFE
A LMNP status under the real or micro regime and its practical effects
The tax regime for income, micro-BIC or real, does not have a direct impact on the liability for the contribution on business property. On the contrary, it can influence the perception that the lessor has of this charge. A real LMNP, which optimizes its results through depreciation, often feels the burden of the CFE more acutely, as it remains due even in the absence of income tax.
From an administrative point of view, the real regime generally implies better structuring of the activity, which limits the filing errors related to the CFE. In contrast, micro-BIC LMNPs, sometimes less supported, find out about this tax later, often upon receiving a first notice several years after starting the activity.
Multi-location with several municipalities
When a LMNP operates several furnished accommodations located in different municipalities, the CFE is due in each municipality. This situation can lead to a multiplication of CFE notices, with distinct amounts and modalities. Each municipality applies its own rules, which complicates tax management.
This multi-localization must be integrated into the strategic thinking of the investor. In some cases, concentrating assets in the same municipality can limit the number of CFE to be paid, even if the unit amount remains unchanged.
The management of the CFE notice and adjustments
The steps to recover, pay, and monitor the CFE
The business property tax is dematerialized. The notice is made available on the professional space of the tax website, usually in the fall. Payment must be made before the indicated deadline, or else a penalty may apply. The LMNP must therefore ensure to have active access to their tax space and to regularly check the issued notices.
Monitoring the CFE is an integral part of property management. The absence of a notice does not necessarily mean an exemption, but it may reveal a failure of initial declaration that will be regularized later.
Frequent reasons for inconsistent amounts in LMNP
It often happens that the amount of the CFE seems inconsistent with the activity exercised. This can result from a base that is too high, from a misallocation of the competent municipality, or from a lack of consideration of an exemption. In some cases, the administration applies a base corresponding to an activity larger than reality.
These situations are not rare in LMNP, as the initial information is sometimes incomplete or misinterpreted. Special vigilance is therefore necessary upon receiving the first CFE notice.
The procedure to correct or challenge a business property tax
When an LMNP believes that their CFE is incorrect, they can initiate a claim procedure with the tax administration. This process must be substantiated and accompanied by precise supporting documents. The deadlines for claims are strict, requiring swift action after receiving the notice.
A well-founded dispute can lead to a reduction or even total exemption from the business property tax. In the long term, this process also helps secure the following years by permanently correcting the fiscal situation of the furnished rental activity.
The CFE is not a punitive tax, but a normal component of LMNP activity. If managed well, it does not significantly affect profitability. On the other hand, failure to declare or pay can lead to penalties: it is better to anticipate this formal requirement from the first year of operation.
What to remember
Ultimately, the CFE in LMNP is a tax that is often underestimated, but it is structural in the management of furnished rentals. Understanding its mechanisms, identifying possible exemptions, and anticipating its financial impact allows you to avoid costly mistakes and to manage your property with complete peace of mind, with a truly controlled tax vision.
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