Furnished tourist rentals: Registering for the full disclosure regime (Regime Réel LMNP/ LMP)

From the tax year 2024 onwards, a regular tourist rental property, registered as a Meublé de Tourisme, will benefit from only a 30% taxable income allowance under the simplified MicroBIC regime.

The increased 71% taxable income allowance is only available for properties which either have obtained a star-rating (classé) or are a bed-and breakfast (chambre d´hôte).

Another big change is that from the tax year 2024 onwards, the upper income limit to apply the MicroBIC regime has been reduced to 15k Euros. If your annual income is above 15k Euros then you can use MicroBIC for the last time for the tax year 2023, and will be required to register for the Regime Réel from next year onwards !

Therefore, we are making the following recommendations:

If your annual rental income is more than 15k Euros, you need to register for the Regime Réel and you will find details and costs below;

If your annual rental income is between 7.5k and 15k Euros and your annual expenditure is, consistently or on average, more than 30% of your rental income, then you should consider registering for the Regime Réel LMNP and you will find details and costs below;

If your annual rental income is less than 7.5k Euros, this may not justify registration for the Regime Réel but you might still consider registering if you conclude that it would be beneficial for you.

Joining the Regime Réel LMNP

In order for you to to join this regime, the annual rental income must not exceed 23,000 Euros and must also not exceed 50% of the your total income from all sources.

If your rental income exceeds either of these, then you will be required to join a different regime (LMP).

The advantages of the Regime Réel LMNP are that you can deduct all rental expenditure in calculating the taxable income, and that you can also deduct depreciation of the property. The good news is that this depreciation is not taken into account in calculating the capital gain when you eventually sell the property ! Depreciation is rather a complex calculation for this regime but in general, your total property cost would be depreciated over 30 years and the depreciable amount is 85% of the total property cost.

Once inconveniences of the Regime Reel LMNP are the extra accounting costs due to additional tax declarations having to be filed annually. Also, it is possible that you may have to pay an extra business tax called CFE, which might amount to over 1,000 Euros per annum . Registered tourist rental properties may be exempt from CFE, however this can be overruled by the local authority if they vote to do so. But even if you do have to pay CFE, the additional benefits including the deductible depreciation may compensate for this.

If you have any further questions, please do not hesitate to contact us on returns@franceaccountants.com . You will also find informative articles on non-residents’ tax on our blog and website www.franceaccountants.com .