LMNP: real regime or micro-BIC, how to choose the most advantageous for your situation?
Sep 8, 2025
4 minutes
In the world of rental investment, particularly for those who choose to rent furnished non-professionally (LMNP), it is essential to understand the different tax regimes that apply. Two main regimes then present themselves for investors: the real regime and the micro-BIC regime.
These terms may seem technical and abstract to some, but they are of capital importance for determining the profitability and tax management of your rental investments. In this introduction, we will guide you through the nuances and key differences between the real regime and the micro-BIC, in order to help you make informed choices for your properties in LMNP. Whether you are a beginner or seasoned investor, understanding these nuances could optimize your taxation and maximize your profits. Let us dive together into this complex but exciting universe, to illuminate your path towards more effective and diligent rental management.
Optimize the Taxation of your Non-Professional Furnished Rental
The investment in Non-Professional Furnished Rental (LMNP) is a popular solution for diversifying assets and generating passive income. This type of rental, with its tax advantages, nevertheless requires a good understanding of its mechanisms to maximize benefits. Indeed, the choices between the micro-BIC regime, which simplifies management with a flat-rate deduction, and the real regime, which allows the deduction of actual charges, directly influence the yield of the investment. Mastery of tax nuances can transform this type of investment into an excellent financial opportunity. This introduction will guide you in making an informed choice between these two tax regimes.
The LMNP: A key status for furnished rental investment
The status of Non-Professional Furnished Lessor (LMNP) stands today as a figurehead in the field of furnished rental investment in France. Created to encourage individuals to invest in rental real estate while responding to a growing demand for furnished housing, the LMNP presents an attractive alternative to traditional investments.
The main appeal of the LMNP lies in its accessibility combined with particularly interesting tax advantages. Unlike more complex schemes often reserved for large structures, the LMNP allows individual investors to venture into rental real estate with relatively reduced risk. Whether to diversify assets, prepare for retirement, or simply generate additional income, the LMNP status offers flexibility and profitability that increasingly attracts individuals.
As a status accessible even to beginners in real estate, the LMNP does not necessarily require significant experience or substantial capital to start. Moreover, it adapts to various investment strategies, whether in small spaces in the city center or Airbnbs.
In this context, mastery of the legal, tax, and accounting framework of the LMNP becomes a key asset to optimize returns and secure investments. The status offers the possibility of reclaiming VAT on the purchase of the property under certain conditions, benefiting from accounting depreciation to reduce tax liability, and accessing lightly taxed rental income. Therefore, it is a scheme that brings together many key success factors for the savvy investor.
The LMNP stands out as a unique and accessible opportunity in the vast field of rental investment. In the face of a constantly evolving market and sometimes complex taxation, it represents a smart choice for those looking to enter the real estate market while benefiting from favorable tax structure.
The issue of choice: Real regime or micro-BIC, a strategic decision
When launching an activity in France, the choice between the real tax regime and the micro-BIC regime is crucial and can greatly influence your profitability and administrative management.
The real regime allows you to deduct all of your actual expenses, thus reducing your taxable base, ideal if your professional expenses are high. However, it requires precise and rigorous accounting. The micro-BIC regime is appreciated for its simplicity with a flat-rate deduction (71% for sales, 50% for services) and simplified accounting. It is suitable for small structures with actual expenses lower than the deduction.
Your choice depends on the nature of your activity, your expenses, and your tolerance for accounting management. For low expenses and simplified management, opt for micro-BIC. To optimize significant expenses tax-wise, choose the real regime. The right tax regime can optimize your finances and free you up to fully dedicate yourself to your project. Don't hesitate to consult a professional to make the choice best suited to your situation.
The LMNP Status – Fundamentals and Obligations
The status of Non-Professional Furnished Lessor (LMNP) attracts many investors due to its various tax advantages and the management flexibility it offers. This scheme encourages investment in furnished rental real estate. It meets a growing rental demand. It also offers property owners interesting opportunities for profitability. However, as with any investment, it is crucial to understand the fundamentals and the obligations associated with this status to maximize benefits and avoid potential pitfalls.
What is the status of Non-Professional Furnished Lessor?
The status of Non-Professional Furnished Lessor (LMNP) is a tax framework intended for individuals who wish to rent one or more properties as furnished accommodations. This status often concerns those who do not engage in furnished rental as their main activity and who earn rental income below certain thresholds defined by legislation. By opting for the LMNP status, property owners have the opportunity to diversify their assets while benefiting from a potentially advantageous tax regime.
The Conditions of LMNP Status
To qualify for LMNP status, several conditions must be met. First, the annual income generated from the furnished rental activity must not exceed 23,000 euros, or represent less than half of the household's total income. If these thresholds are exceeded, the owner could switch to the status of Professional Furnished Lessor (LMP), which involves other tax and social obligations.
In your situation, your rental income amounts to €25,000, which is above the threshold of €23,000 mentioned for the status of Non-Professional Furnished Lessor (LMNP). However, to determine if you can continue to benefit from LMNP status, it is important to see if this rental income constitutes the majority of your total income.
Another criterion concerns the nature of the rented property: the accommodation must be furnished and ready to live in. This means that the residence must contain all the necessary furniture items to live comfortably, including beds, tables, chairs, kitchen equipment, etc. This furnished criterion is essential for eligibility for LMNP status.
Tax Advantages of LMNP Status
The LMNP status offers reduced taxation that attracts many investors. First, it allows for the depreciation of the property. Depreciation corresponds to a tax deduction of the value of the real estate and furniture over several years, thereby reducing the taxable base. This means that you can spread the cost of the property over its economic lifespan, typically between 20 and 30 years for the walls and 7 to 10 years for the furniture, significantly decreasing your annual taxable rental income.
In addition to depreciation, owners can deduct certain expenses such as management, maintenance, insurance costs, and loan interest. These deductions help lighten the tax burden and improve the net profitability of the real estate investment.
Administrative and Accounting Obligations
In terms of obligations, the furnished lessor must register with the Business Formalities Center (CFE) and obtain a SIRET number for their furnished rental. Although the LMNP status benefits from some simplifications compared to the LMP, rigorous accounting management remains required, especially for those opting for the real regime. This involves keeping all proof of expenses and the annual declaration of results to the tax authorities; you can see more in detail which documents to keep here.
In order to financially optimize the furnished rental activity, it may be wise to seek the services of experts who will assist you with your tax declaration. They can not only help with managing accounting obligations but also guide the owner on the best tax strategies tailored to their situation.
It nonetheless represents a crucial strategic choice: that of the tax regime. Between the real regime and the micro-BIC regime, how to determine which is more advantageous for your situation? Here is a guide to help clarify your decision.
The micro-BIC regime simplicity and flat-rate allowance
Understanding the Micro-BIC Regime
The micro-BIC regime (Industrial and Commercial Profits) is often chosen by new investors due to its simplicity. This regime allows for a flat-rate deduction of 50% on taxable rental income (71% for classified short-term rentals). This means that only half of your rental income will be subject to tax, thus simplifying administrative processes as little accounting is required.
However, the revenue ceiling for the micro-BIC regime in 2025 is set at €77,700. If your income exceeds this threshold, you will need to opt for the actual regime or the status of Professional Furnished Rental (LMP).
The tax rules change starting from the income of 2025 to be declared in 2026. For non-classified furnished tourist rentals, the threshold of the micro regime decreases from €77,700 to €15,000. The deduction rate drops from 50% to 30%.
Example:
By opting for the micro-property regime, you benefit from a deduction of 50%. With €25,000 in rental income per year, you would deduct 50% of your income, or €12,500, and pay taxes on the remaining €12,500. If your marginal tax rate is 30%, then your combined tax rate, taking into account social contributions of 17.2%, would be 47.2%. Thus, you would pay 47.2% of €12,500, or €5,900.
Principle and Operation of the Micro-BIC Regime for LMNP
The micro-BIC regime is a simple tax system. It is aimed at owners of non-professional furnished rentals (LMNP). These owners have annual rental income that does not exceed a certain threshold. This regime's main advantage is to simplify administrative processes and reduce the tax burden through a flat-rate deduction. In 2024, the threshold for annual revenue to benefit from this regime is set at €77,700. Eligible owners receive a standard deduction of 50% on their gross rental income. This means they pay taxes on half of their rental income. This simplifies tax calculation and reduces the amount to be paid.
Operating under the micro-BIC regime also means that the LMNP owner is not required to maintain complex accounting. The processes are thus simplified, as it is not necessary to produce a detailed accounting balance, unlike the actual regime. This can represent a significant advantage for those who wish to avoid high accounting fees and heavy administrative management. However, it should be noted that this administrative simplicity is offset by the absence of specific tax deductions, such as loan or maintenance expenses, which could further reduce the tax burden under the actual regime. The choice between the micro-BIC regime and the actual regime therefore depends on each owner's individual profile and financial goals.
Limits and Disadvantages of the Micro-BIC Regime
The micro-BIC regime (Industrial and Commercial Profits) is often appreciated for its administrative simplicity, but it is not without limits and disadvantages. One of the main obstacles for entrepreneurs is the revenue ceiling. To benefit from this regime, annual revenue must not exceed a certain threshold. This threshold is €188,700 for the sale of goods. It is €77,700 for services. These amounts may change according to fiscal years. This ceiling can hinder some businesses in full development that, once this threshold is exceeded, are forced to switch to a more complex tax regime, such as the simplified or normal actual regime. This transition can lead to heavier accounting management and more numerous administrative obligations, often requiring the intervention of an accountant.
A disadvantage of the micro-BIC regime is the flat-rate calculation of taxable profit. Unlike the actual regime, it applies a fixed deduction (71% for sales, 50% for services) without deducting actual expenses. This can disadvantage those whose expenses are higher. Moreover, this regime does not allow for VAT deduction, which hampers investments or sectors where VAT recovery is important. It is advisable to evaluate one’s situation carefully before choosing this regime.
The Simplified Real Regime – Optimization and Deduction of Charges
The simplified actual tax regime is a tax option that can be particularly advantageous for small and medium-sized enterprises, as well as for self-employed workers. It allows for greater flexibility and, often, tax relief through optimized expense deductions. In this section, we will explore the various ways to optimize your tax situation under this regime while maximizing possible deductions.
Understanding the Operation of the Simplified Actual Regime
The simplified actual regime consists of assessing your taxable income based on the difference between your actual revenues and expenses. Unlike the micro-enterprise regime, which applies a flat-rate deduction for expenses, the actual regime allows for the accounting of all incurred expenses. This means that for every expense incurred in the course of operating your business, a deduction is possible, provided it meets the acceptability criteria set by the tax administration.
Deductible Expenses: A Powerful Tax Lever
One of the keys to tax optimization under the simplified actual regime is to properly identify and account for all deductible expenses. These expenses can include:
Personnel Costs: Salaries, social security contributions, and other benefits provided to employees can be deducted.
Operating Expenses: Everything related to rent, energy, and office supplies falls into this category.
Purchases Necessary for the Business: Raw materials, supplies, goods, etc.
Travel and Transportation Costs: Mileage, public transport tickets, and accommodation costs if justified in a professional context.
Loan Interest: If the loan is intended for the purchase of assets for the business.
Tips to Maximize Deductions
To make the most of this regime, it is crucial to retain receipts for each of your expenses. Here are some strategies to maximize your deductions:
Maintaining Accurate Accounting: Accuracy in maintaining accounting records is essential. Keep a detailed and organized record of all your financial transactions.
Anticipating Investments: Plan your significant investments at the most opportune time to optimize their tax impact.
Consulting a Chartered Accountant: A professional can provide valuable advice to navigate the complexities of tax laws and ensure you do not miss important deductions.
In conclusion, the simplified actual regime offers a significant opportunity for effective tax management for professionals and businesses capable of rigorously managing their accounts. Through a deep understanding of deductible expenses and careful accounting, it is possible to substantially reduce taxation while complying with current laws.
Depreciation: The Heart of Tax Optimization under the Actual Regime
Depreciation is a fundamental pillar of the actual regime, playing a central role in tax optimization for businesses and individuals with rental properties. When we talk about depreciation, we refer to the accounting allocation of an asset's cost over its useful life. This process allows owners to assert a decrease in the value of their assets in calculating their expenses, significantly impacting their taxable income.
Within the framework of the actual tax regime, depreciation serves as a crucial lever to allocate costs strategically. Whether for real estate, industrial equipment, or other durable assets, this approach allows not only for a legal reduction in the tax base but also for better cash flow management for the business. By spreading an asset's cost over several years, businesses can align tax deductions with revenues generated by the asset, thereby providing improved tax planning capabilities.
Depreciation under the actual regime is also an intelligent adjustment tool in response to economic changes. Adopting faster depreciation methods, such as declining balance depreciation, can be advantageous in contexts where it is crucial to generate liquidity in the short term. Conversely, a straight-line method will stabilize annual expenses and smooth costs over an extended period.
Depreciation has a significant effect on tax optimization in rental real estate. Owners can deduct a substantial portion of the property's value each year. This allows them to reduce their taxes. They can also change their depreciation method according to tax laws and market conditions.
In summary, depreciation is more than just an accounting procedure; it is a strategic axis for any entity seeking to optimize its taxation under the actual regime. Mastering the different types of depreciation and their judicious application can make the difference between effective tax management and unnecessary tax overload. It is a field where expertise and anticipation converge to support financial solidity and the long-term growth of the business.
Understanding Depreciation Easily.
Depreciation means allocating the value of an asset over its usage period because a furnished apartment wears out over time. Furniture and equipment depreciate differently depending on their lifespan, for example, a chair lasts less long than a roof. The state provides depreciation durations, and a tax expert can advise based on the situation. For example, for an apartment worth €500,000, of which 50% is the building, you can depreciate €250,000 over 50 years, or €5,000 per year, reducing the taxable base. Each element has its own duration, which helps align expenses and revenues, often deferring or canceling tax, especially at the beginning of the investment.
Table 1: Example of a Depreciation Table
The Depreciations | Duration (years) | Share |
Depreciation of major works | 50 | 50% |
Depreciation of facade | 20 | 20% |
Depreciation of technical installations | 15 | 20% |
Depreciation of interior fittings | 5 | 10% |
Depreciation of works | 10 | 100% |
Depreciation of furniture | 5 | 100% |
Depreciation of agency fees | 4 | 100% |
Depreciation of hunting fees | 4 | 100% |
Depreciation of notary fees | 25 | 100% |
Depreciation of architect fees | 20 | 100% |
Managing Deficits: A Major Advantage of the Actual Regime
Deficits in the Actual Regime under LMNP
The LMNP regime allows several expenses to be deducted from your rental income, such as loan interest, renovations, management fees, and other expenses related to the property. If these deductions exceed the revenues, a property deficit occurs. Unlike unfurnished rental, where the deficit can be deducted from global income up to €10,700 per year, in LMNP, it only offsets future rental income. This carryforward over ten years helps smooth income and tax, providing security and stability to investors against income or expense fluctuations, thereby improving profitability and facilitating financial planning.
The Impact of Choice on the Capital Gains Tax when Reselling under LMNP after Depreciation
Once the entire value of the property has been depreciated, calculating the capital gains upon resale becomes crucial. Unlike a non-depreciable property, where the capital gain is simply the difference between the sale price and the original purchase price, in LMNP, it is calculated based on the difference between the sale price and the net accounting value. The net accounting value being the purchase price minus the accumulated depreciation, this can significantly increase the taxable capital gain.
It is important to note that tax regulations concerning capital gains have undergone adjustments. Previously, the rules were less clear regarding the treatment of depreciation in resale cases. Today, it is established that these depreciations mechanically reduce the net accounting value. Nevertheless, the capital gains tax is gradual over time, due to the exemption for the duration of holding.
In France, this exemption begins after five years of holding and progresses each year. As a result, if you hold your property long enough, you can alleviate or even eliminate the capital gains tax. For example, after 22 years of holding, the capital gain is completely exempt from income tax, while the social contribution of 17.2% (social levies) is only exempt after 30 years. Thus, time can be the best ally of LMNP investors, allowing them to maximize their profits at resale while minimizing the tax impact.
However, it is essential to plan the resale and consider the holding duration to optimize the final tax outcome, especially regarding income tax. Regulatory changes have clarified the treatment of depreciation, but they also highlight the importance of active investment management to fully benefit from the advantages of the LMNP status.
Here is an example that illustrates how the depreciation of an asset can influence the calculation of the capital gain upon its resale. Let’s go through the steps:
Initial purchase price : 200,000 €
Total depreciation over 5 years : 50,000 € (or 10,000 € depreciation per year)
Net book value after depreciation :
200,000 € (purchase price) - 50,000 € (total depreciation) = 150,000 €
When you sell the asset for 220,000 €:
Sale price : 220,000 €
Realized capital gain :
220,000 € (sale price) - 150,000 € (net book value) = 70,000 €
Depreciation reduces the net book value of the asset, which can increase the taxable capital gain at the time of resale. The impact of depreciation should therefore be taken into account in the overall investment strategy, especially regarding the taxation of capital gains.
Conclusion: being supported to choose the right diet
As part of managing a rental real estate project, the choice between the micro-BIC regime (Industrial and Commercial Profits) and the LMNP status (Non-Professional Furnished Rental) is crucial for optimizing taxation and, consequently, the profitability of your investment. Each of these tax regimes offers distinct advantages that may align differently with your financial and estate goals.
The micro-BIC regime simplifies administrative procedures thanks to its flat-rate allowance, making the management of rental income easier and often more advantageous for small investors or those who do not anticipate significant deductible renovations. On the other hand, the LMNP status allows for the deduction of numerous actual expenses, including depreciation, and can be particularly interesting for investors looking to maximize their ability to generate cash flows, especially in heavier investment contexts or when significant works are planned.
Thus, a thorough analysis of your personal situation, your long-term goals, and the specific characteristics of your real estate project is essential to choose the most suitable tax regime. Making an informed decision on this point can not only positively influence the financial performance of your investment but also ensure greater peace of mind in managing your assets. As a consequence, it is strongly advised to consult tax experts or wealth management advisors to ensure that the chosen framework aligns perfectly with your overall strategy. Ultimately, a thoughtful choice between micro-BIC and LMNP can be a decisive lever for the success of your rental real estate project.
Also discover
