 |
|
| The advantages of furnished lets |
You decide when your property is available for rent
The flexibility of furnished lets enables you to indicate when you wish to rent your property and when you wish to keep it for your own personal use.
The guarantee of rent payment
As the vast majority of our customers are businessmen and women who are in Paris on short- and long-term business assignments, the rents are very often paid directly by their employer by way of a corporate rental agreement.
What's more, the substantial demand for furnished property in Paris means that we can meticulously select tenants and thus ensure that the latter can provide all the necessary financial guarantees.
Guaranteed high profitability
Furnished property is let at rates that are 20 to 30% higher than average rental market rates, thereby increasing your rental income. As a result, your property can earn you maximum income during your absence, thereby covering all the overheads related to the property.
Furnished let investments currently provide the best ROI of the rental market whilst reducing the risk of unpaid rent or vacant property to a minimum.
Well-maintained property
A furnished let enables the owner to keep tabs on the proper upkeep of his/her property, because short-term lets provide owners with a practically uninterrupted vision of the property's condition.
What's more, BYP systematically undertakes to ensure that one of its customer service representatives is present at each check-in and departure inventory to make certain that the property is handed back in its original condition. |
| Taxation of landlords of furnished accommodation |
Two tax regimes exist: Professional furnished accommodation landlord / Non-professional furnished accommodation landlord
The laws applicable to Professional furnished accommodation landlords (loueur en meublé professionnel / LMP) and Non-professional furnished accommodation landlords (loueur en meublé non professionnel / LMNP) make it possible for landlords to implement optimum investment strategies. During the first phase, for example, most of the revenue is absorbed by operating costs and mortgage interests, thereby reducing taxable income to nil. Finally, during the second capital constitution phase, depreciation deferred from the previous years maintains taxable income at nil.
Understanding the Professional and Non-Professional Furnished Accommodation Landlords (LMP / LMNP) fiscal regimes
The income from furnished accommodation is taxed differently depending on whether the landlord is professional or non-professional. Definition of both systems:
Natural or legal persons (Limited liability family enterprises, sole traders) whose income is taxed, are considered as professional landlords when they are registered with the Registre du Commerce et des Sociétés (RCS), and when this revenue amounts to more than €23,000 annually and represents over 50% of their global income.
In contrast, non-professional landlords are people, registered or not with the RCS, for whom this activity does not represent over 50% of their global revenue, and whose rental revenue is less than or equal to €23,000.
In the framework of an LMP (professional furnished accommodation) rental, any property losses can be set off against the landlord's global fiscal revenue (providing the latter has opted for the normal (réel) or simplified (réel simplifié) tax regime.
These same property losses cannot however be set off against non-professional revenues in the case of the LMNP system (non-professional furnished accommodation).
Fiscal incentives common to professional and non-professional furnished rentals:
The professional and non-professional furnished accommodation systems – LMP/LMNP – make it possible to apply straight line depreciation to property (excluding land) over a period of 30 to 40 years, but also to the furnishings over a shorter period running from 5 to 7 years. This gives rise to depreciation charges that can be deferred.
As the percentage of the borrowed capital becomes steadily greater in the loan payments, the depreciation charges not deducted in previous years can be set off against current rental revenue. This makes it possible to substantially reduce the fiscal impact at the end of the investment period.
In this way, rental revenues are exempt from taxation, even when the operating costs are practically nil. The investor can accumulate depreciation charges during loss-making periods and carry them over to a subsequent period, thereby absorbing rental revenue.
Benefits of the LMP regime
The LMP - professional landlord of furnished accommodation – makes it possible to deduct all the expenses related to the property from the global revenue: loan interests, co-ownership expenses, acquisition costs, maintenance and repair costs, property tax and property depreciation.
If the professional furnished accommodation landlord (LMP) has exercised this activity for at least five years and if he/she has not earned annual revenue in excess of €250,000 over the previous two calendar years, then in the case of sale of the property, the transaction is exempt from capital gains tax.
Subject to the same regime as that applied to transfers of businesses, the heirs of a professional furnished accommodation landlord (LMP) benefit from tax relief on inheritance tax (payment deferred for five years and then spread over 10 years).
If the investor earns over 50% professional income from this activity (excluding allowances, pensions, income from property and financial investments), the rented property is not subject to wealth tax (ISF).
Benefits of the LMNP regime
In the same way as the professional furnished accommodation landlord (LMP), in the case of non-professional furnished accommodation landlords, all the property charges can be deducted from the rental revenue. These deductions can be set off against all the revenue generated by the rental. If the "non-professional furnished accommodation landlord" has opted for the normal (réel) tax regime, then the rental revenue is entirely non-taxable due to the depreciation of the property itself, and the fixtures and fittings.
In the case of an LMNP regime (non-professional furnished accommodation landlord), capital gains related to a sale of the property are subject to private capital gains (taxed at 27%, including CSG (supplementary social security contributions), after deduction of 10%/year as of the 6th year, which means exemption as of the 16th year).
BYP's point of view of the LMP and LMNP regimes
Both the LMP (professional furnished accommodation) and LMNP (non-professional furnished accommodation) landlord regimes represent highly attractive property investment management tools.
These systems represent a combination of tax regimes and provision for property investment. In both cases and by way of the LMP and LMNP systems, the purpose is to build up property holdings whilst earning a monthly income thanks to rents, which will supplement retirement pensions.
Legal texts :
• CGI (Code Général des Impôts / General Tax Code): article 151 seventh section, 39 C and 31
• Loi des finances (Finance Act) 1999: Law n° 98-1 266 of 30th December 1998
• Loi de finances rectificative (Amendment to Finance Act) 2002: Law n° 2002-1 576 of 30th December 2002
• Loi de cohésion sociale (Social Cohesion Act): Law n° 2005-32 of 18th January 2005 - JO 2005
• Loi de finances (Finance Act) 2009 |
|
|
|
