What are the tax advantages of furnished rentals?

One of the major advantages of furnished rentals lies in its particularly interesting tax regime. Unlike bare rental taxed in the land income category, rents from furnished rentals fall under Industrial and Commercial Profits (BIC).

LMNP: Renter in Furnished Non-professional

The LMNP status applies if the annual rental income does not exceed €23,000 or 50% of the household’s overall income. Two tax regimes are then possible:

The micro-BIC: a flat rate allowance of 50% is applied to collected rents.

The real regime: allows to deduct all expenses (works, loan interest, insurance, condominium fees, property tax, etc.) and to depreciate the property and furniture. Result: a very low tax burden, or even zero.

LMP: Professional Furnished Rental

If the revenues exceed the thresholds, the LMP status applies. It offers other advantages:

Possible exemption from IFI (Tax on Real Estate Wealth).

Exemption for capital gains on resale under certain conditions.

Deduction of deficits from overall income without limit.

Comparison with naked rental

Bare rental does not allow depreciation of the property and offers a less advantageous deduction of charges. That is why many investors choose furnished accommodation to optimize their taxation.

Conclusion

Furnished rentals, via the LMNP or LMP regime, allow for strong tax optimization. It is a powerful lever for investors wishing to maximize the net profitability of their real estate assets.