All you need to know about investing under the LMNP / LMP law

Invest in real estate with LMNP / LMP law

Recovery of VAT

If you entrust the management of your furnished property to a managed-residence operator via a commercial lease, and they propose hotel-type services, you can claim back the VAT on the total cost of your property.

Non-Professional Leaser of Furnished Property (LMNP)

Principle

The Non-Professional Leaser of Furnished Property (LMNP) status concerns private individuals who commercially rent their furnished property (new or old) to a residence operator that we call the “manager” (e.g. MMV, Loc Habitat, Terrésens Vacances, etc.). The latter will rent out your apartment and contractually commit to rental payments during the entirety of the commercial lease.

Advantages

– VAT savings in the purchase of property
– The rent received is contractually defined by a commercial lease of a minimum period of 9 years and paid by the manager even if the apartment remains vacant between 2 tenants.
– The rental revenues generated are virtually not taxable for 20 to 30 years. This furnished property is the ideal investment for those seeking to generate an efficient and profitable income after tax to supplement their retirement income.

Conditions

– Investing in a furnished property and entrusting its rental management via a commercial lease for at least 9 years
– The manager must provide at least 3 or 4 of the following hotel-type services: breakfast, regular cleaning of the premises, provision of household linen, customer reception.

Professional Leaser of Furnished Property (LMP)

The LMP status differs from the LMNP status uniquely in terms of taxation as, in this case, the deficit generated is reportable (with no upper limit) on global income.

The 3 following conditions must be met to be eligible for the LMP status:

– Registration on the French RCS (Company Registration Office)
– Revenues must exceed €23,000, inc. VAT, per annum.
– These revenues must be greater than the total amount of all other business income in the taxable household.

It is worth noting that, given these 3 conditions, very few taxpayers are eligible for this status.