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how to properly declare your rental income

Landlord, do you own one or more accommodations that you rent furnished? Here is how to correctly declare the income from these rentals to the tax authorities.

Furnished rental: the status of LMNP or LMP

Furnished rental can be exercised under the status of non-professional furnished rental company (LMNP) or professional furnished rental company (LMP). This depends on the amount of rent received, called here “rental revenue”.

You are automatically LMP if you meet these two conditions:

• The annual income from this rental activity by all the members of your tax household exceeds €23,000 (all taxes and charges included).

• These receipts exceed the income of your tax household subject to income tax (salaries, etc.).

“Regardless of your status, you have the obligation to carry out certain procedures as a lessor, such as obtaining a SIRET number”, explains Flatlooker, an online rental and management agency.

Rental income taxed in the BIC category

Rental income from furnished rentals is taxed in the category of industrial and commercial profits (BIC).

You must tick the box “non-professional furnished rentals” for LMNP and the box “professional industrial and commercial income” for LMP, when you choose the categories of income collected at the beginning of your tax return. You can declare in these two cases to the micro-BIC regime or to the real regime.

Declare to the micro-BIC scheme

The micro-BIC regime applies when the amount of rental income for the previous year or the penultimate year does not exceed €72,600 excluding tax for classic furnished rentals and €176,200 excluding tax for rentals guest rooms and furnished tourist accommodation.

• For LMNPs, a fixed 50% reduction is applied for standard furnished rentals. The amounts collected must then be indicated in boxes 5ND, 5OD or 5PD on the 2042-C-PRO declaration. “The LMNP status allows you to benefit from a significant reduction of 50% when you choose the micro-BIC regime, observes Nicolas Goyet, president of Flatlooker. If the deductible expenses are lower than this allowance, it is generally this solution that we recommend to our owner clients. »

In the case of bed and breakfasts or furnished tourist accommodation, a fixed reduction of 71% is applied. The amounts collected by the LMNP are then to be indicated in boxes 5NG, 5OG, 5PG.

For LMPs, the flat-rate allowance is also 50% for standard furnished rentals. The rents collected must be declared in boxes 5KP, 5LP, 5MP.

As for LMNP, the reduction is 71% for guest rooms and furnished tourist accommodation. The rents collected by the LMPs are to be indicated in the boxes 5KO, 5LO, 5MO.

Declare to the actual scheme

Even if your rental income does not exceed the micro-BIC ceilings, you can choose to declare the real regime. It allows you to deduct each year from your rental income the charges related to the acquisition of housing for their actual amount (co-ownership fees, maintenance expenses, property tax, etc.), as well as the interest and borrowing costs of your credit. real estate. You can also depreciate the value of the property and its furniture over several years.

Be careful, if you opt for the real, you must declare your receipts under this regime for a minimum of three years. “It is therefore preferable to plan for three years in terms of its expenses before choosing its tax system”, notes the agency Flatlooker.

• For LMNPs, you must indicate the profits from the furnished rental in the boxes ranging from 5NA to 5PK. If there is a deficit, it must be noted in the boxes from 5NY to 5PZ.

Note: boxes 5NA, 5OA and 5PA for the profit, or 5NY, 5OY or 5PY for the deficit, must be completed if you have joined an OGA (a management body, approved by the tax authorities, whose mission is to inform companies about accounting and taxation) or to a tax auditor (a chartered accountant approved by the tax authorities). This membership avoids the increase in taxable profit for non-membership of an OGA. Note that the finance law for 2021 will eliminate this increase from 2023.

• For LMPs, as part of a real profit regime, income must be declared in the additional document 2031 and reported in the 2042-C-PRO declaration in boxes 5KC, 5LC, 5MC if you are a member of an OGA or a tax auditor or else, if this is not the case, in boxes 5KI, 5LI, 5MI. Deficits are to be declared in boxes 5KF to 5ML on the same principle.