You have chosen the status of Non-Professional Furnished Landlord (LMNP) and are unsure which tax regime to choose between micro-BIC and the Real regime for your LMNP declaration?
We explain everything in this article!
A regime that is advantageous when your expenses are less than 50% of your income.
If your annual rental income is below €77,700 for standard furnished rentals (or €188,700 for classified tourist rentals and bed-and-breakfasts), you are eligible for the micro-BIC regime. Beyond these thresholds, the Real regime automatically applies.
This regime is much simpler than the Real regime, primarily because it allows you to do without an accounting solution. Under the micro-BIC, a standard deduction is applied to rental income, and you are taxed only on 50% of your earnings. If your expenses exceed 50% of your rental income, the Real regime will be more beneficial. Note that under the micro-BIC regime, no actual expenses can be deducted.
Example: Jean has €50,000 in annual rental income for 2021. His deductible expenses amount to €32,000 (condominium fees, loan interest, furniture, repairs, depreciation, etc.).
Thus, for 2021, it is more advantageous for Jean to opt for the Real regime.
The micro-BIC regime is valid for 1 year and is automatically renewed for the same period. To switch from micro-BIC to the Real regime, you must send a letter to your tax center indicating the option change. Qlower can assist you with this if needed.
Each year, the rental income from an LMNP property under the micro-BIC regime must be reported on form 2042 C PRO (your regular income tax declaration) in box 5ND.
Often more advantageous, it allows you to deduct your actual expenses and, most importantly, to amortize your property when filing your declaration.
If your annual income exceeds €77,700, you are automatically subject to the Real regime. Below this threshold, you can choose between the micro-BIC and the Real regime.
Good to know: If you own the property jointly, you are automatically subject to the Real regime.
Under the Real regime, you can deduct expenses such as:
It’s not just the actual expenses that can be deducted. You can also deduct the annual amortization of your property. Amortization is the accounting process of representing the depreciation of the property over time. This “charge” is purely accounting-based and does not reflect an actual expense. Combined with your other deductible expenses, amortization often results in a zero taxable income, meaning no tax on rental income!
In addition to the property itself, you can amortize:
Reminder: Keep all receipts for these expenses. The date of the expense must be after the declared start date of your rental activity.
Declaring your activity is mandatory to benefit from LMNP status. Qlower can handle the administrative procedure for €150, ensuring you avoid costly mistakes. Simply fill out this form, and we’ll take care of the rest!
This regime is valid for 2 years and is automatically renewed for the same duration.
Under the Real regime, you must maintain accounting records and complete several forms each year for your tax declaration.
As with the micro-BIC regime, you must fill out form 2042 C PRO. Most non-professional landlords are subject to the simplified Real regime, requiring the following forms:
These forms must be submitted to the corporate tax office (SIE).
The declaration must be filed online through the tax administration’s website or via tax declaration software. This is a complex process prone to errors, so we strongly recommend using a professional to verify your accounting, complete the necessary forms, and submit them electronically to the tax authorities.
Qlower can handle this for you for €35/month for one property (or €269/year), with €130 per additional property for the annual tax declaration.
Important: Choosing between the micro-BIC and Real regimes is complex and binding. Don’t hesitate to seek advice from specialists to make informed decisions!
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