The regime of the Lessor Non-Professional Furnished Rental (LMNP) is often chosen to reduce income tax while developing a profitable real estate investment, but understanding precisely which expenses can be deducted remains essential for optimizing taxation. The actual expenses permitted by the applicable tax regime in LMNP are crucial for reducing taxable income, especially when opting for the Simplified Real regime rather than the micro regime or the micro-BIC regime. Correctly identifying these expenses ensures a compliant, coherent, and tax-efficient tax declaration.
The actual deductible expenses in LMNP
The necessary expenses for the operation of the activity
Any furnished rental activity generates rental charges and management fees necessary for its operation. These expenses, which directly relate to industrial and commercial profits, are considered real charges as long as they contribute to the operation of the housing. They include, for example, travel related to inventory inspections, the purchase of consumables, or essential services for the rental relationship.
Their deduction applies only within the framework of the Simplified Real regime, unlike the micro-BIC regime which applies a flat-rate deduction and ignores individual expenses. For a landlord wishing to optimize their results, taking these specific fees into account thus represents a significant advantage over the micro regime.
The costs for maintaining or restoring the housing
A furnished apartment must remain in good condition to maintain its profitability and avoid a loss of value. Expenses including light renovation work, common repairs, or restoring equipment directly relate to deductible charges in LMNP. This includes, for example, painting, repairing furniture, or replacing a defective appliance, as long as the intervention does not alter the structure of the property.
These works are not intended to extend the depreciation period of the housing, as they do not fall under depreciable charges but rather under an immediate expense that allows for a reduction in taxable results. This distinction is essential to avoid confusion with certain patrimonial works, which must be classified differently when filing tax returns.
The costs related to administrative and financial management
The furnished rental also involves rental management fees, subscription fees for accounting tools, or administrative services. All these costs, as long as they strictly concern the operation of the property, are among the real deductible charges in LMNP and directly influence the landlord's income tax.
Fees for an accountant or an outsourced manager are fully accepted, as they ensure proper accounting records under the industrial and commercial profit tax regime. For a real estate investor seeking to secure their accounting, these expenses serve as both a compliance tool and a lever for reducing taxable income. The costs related to acquisition and financing
The borrowing interest and associated bank fees
When a landlord finances their property with a mortgage, borrowing interest represents one of the most important charges to deduct. Their deduction is accepted as long as the loan finances the acquisition, renovation work, or improvement of the furnished housing that is being rented. They fully integrate into the logic of the real charges of the Simplified Real regime.
In addition to these interests, associated bank fees are included: application fees, insurance related to the loan, or financial guarantees. Their tax treatment is strict: they are considered operating expenses and not acquisition costs, distinguishing them from generally non-deductible patrimonial costs.
The deed fees related to the activity and their deduction conditions
Some acquisition costs cannot be immediately deducted but are integrated into the property’s patrimonial base. However, when a deed directly concerns the operation—for example, a contractual document necessary for the rental—the expense becomes a true deductible charge in LMNP. The landlord must therefore differentiate between the costs related to the purchase of a real estate investment, which are not deductible, and those related to its operation, which are accepted as real charges.
This fiscal boundary prevents confusion between patrimonial expenses and operational expenditures. It also contributes to the coherence of the tax declaration, which must clearly distinguish between amounts eligible for immediate deduction and those attached to a potential depreciable base.
The insurance expenses covering the property or the operation
Any rental activity carries risks, and the insurances taken out to protect the property or guarantee income are fully accepted as deductible charges in LMNP. This category includes insurance for non-occupying owners, essential for covering damages not handled by the tenant's insurance. It also includes multi-risk insurance, guarantees against unpaid rents, or legal protections.
The common point of these expenses lies in their direct utility to the activity: they reduce the financial vulnerability of the landlord. A rent guarantee, for example, can compensate for several months of absence of income and, simultaneously, decrease the taxable base thanks to the deduction of its annual premium. Thus, the landlord gains security without increasing their tax burden.
The current charges of the landlord in LMNP
The recoverable or non-recoverable co-ownership charges
In a furnished rental located in a co-ownership, certain common expenses recur regularly and fully fall within the deductible charges in LMNP. Non-recoverable charges, meaning those that the landlord cannot charge back to the tenant, represent an essential part of the annual budget. They particularly concern the work fund, the fees of the property manager, the maintenance of common areas, or the conservation of the building.
The distinction between recoverable charges and non-recoverable charges plays a strategic role. A recoverable expense cannot be deducted since it is ultimately borne by the tenant. On the other hand, any non-recoverable charge, as long as it is justified, can reduce the taxable income. A vigilant landlord regularly checks the co-ownership statements to properly identify these amounts and optimize their taxation.
Energy, maintenance, and service expenses
The operation of a furnished housing requires a series of ongoing expenses essential for the tenant's comfort. These deductible charges in LMNP include particularly water, electricity, internet subscription, or even collective heating when these costs remain the responsibility of the landlord. Their deduction is justified by their direct contribution to the expected level of equipment in a compliant furnished rental.
Maintenance services are added to these essential expenses. The maintenance of household appliances, occasional professional cleaning, or the upkeep of outdoor spaces are part of the charges accepted by the tax administration. These costs, often modest but frequent, help maintain an attractive rental, avoid heavier repairs, and control taxation through precise and documented accounting.
Fees and services of external professionals
When a landlord delegates certain tasks to specialized contractors, the billed fees become deductible as long as they directly relate to the rental activity. This notably applies to agency fees for rental management, inventory reports conducted by a professional, or concierge services in the context of short-term rentals. The logic is simple: the cost of an outsourced task replaces work that the landlord cannot or does not wish to perform themselves.
These services often represent a notable gain in time and efficiency, especially for landlords managing multiple properties or renting remotely. Outsourcing can also enhance the quality of service offered to the tenant, which promotes loyalty and reduces vacancy periods.
The deduction of these fees, while reducing the taxable base, thus contributes to a more professional and more profitable management of the estate.
The limits and exclusions in the LMNP regime
Non-deductible expenses despite their link to the property
Some expenses, although they directly concern the housing, are not among the deductible charges in LMNP. This exclusion is based on a specific tax logic: only expenses incurred for the operation are accepted, excluding those related to acquisition or wealth enhancement. This includes notary fees, transfer duties or transformation works that significantly increase the value of the property.
This rule may surprise beginner landlords who may ignore some of their obligations, as these expenses often represent significant amounts. However, their tax treatment differs because they are considered investment elements and not operational charges. Their consideration goes through specific accounting mechanisms, but they cannot in any case immediately reduce the taxable result. A good understanding of this distinction avoids declaration errors that could be corrected by the administration.
Costs to be allocated differently depending on their actual nature
Some expenses require careful analysis before being qualified as deductible charges in LMNP. Their treatment depends on the nature of the operation, its objective, and its impact on the housing. For example, a partial replacement of equipment is generally considered a maintenance expense, while a complete replacement may fall under a distinct wealth treatment.
The challenge lies in the ability to precisely categorize each expense. A landlord who confuses maintenance and improvements risks improperly deducting a charge that should have been amortized, which could attract the attention of the tax administration. Conversely, strict classification can optimize taxes without ever stepping outside the legal framework. The use of detailed estimates and explicit invoices allows for this distinction to be supported uncontestably.
Tax risks in case of poor categorization
An imprecise management of deductible charges under the real regime exposes the landlord to significant risks, especially in the event of a control. A misclassified expense or insufficient justification can lead to a tax reassessment, increasing the taxable profit and, consequently, the tax owed. In the most sensitive cases, penalties may be added, especially if the administration considers that there has been manifest negligence or repeated error.
The risk also lies in the overall coherence of the accounting. An incoherent categorization can be interpreted as bad faith or an attempt to artificially reduce the tax base.
To avoid these pitfalls, landlords often adopt a strict method of monitoring expenses, including the systematic archiving of supporting documents and the assistance of an accountant when the amounts involved become significant. Caution in this phase not only protects against errors but also secures the activity in the long term.
What to remember
Deductible expenses in LMNP provide an essential lever to reduce taxation and optimize the profitability of furnished rentals, provided that one precisely masters their nature and tax treatment. By clearly distinguishing between operating expenses, those related to financing, current charges, and exclusions, the landlord can establish a rigorous, transparent management that meets the expectations of the administration.
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