BECOMING a HOMEOWNER
Tax exemption with LMNP or LMP status
You can qualify for LMNP status if you're looking to invest in a second home as a rental property. This arrangement is mainly used to build up assets and benefit from advantageous tax breaks; as an investor, it offers you long-term, tax-free rental income.
LMNP -furnished rental investment
What does LMNP status mean?
First introduced in 1947, this tax incentive scheme allows you to become the owner of a furnished property, typically in a serviced residence, whether new or existing.
You can qualify for LMNP status if you're looking to invest in a second home as a rental property. This arrangement is mainly used to build up assets and benefit from advantageous tax breaks; as an investor, it offers you long-term, tax-free rental income.
The conditions for benefiting from LMNP
To be eligible for the status of ‘Non-Professional Furnished Lessor ’, you need to meet certain conditions:
- Purchasing new or existing furnished accommodation
- Rental to a person or legal entity
- To qualify as a ‘Loueur en Meublé Non Professionnel,’ the income from furnished property rental must be less than 50% of total income
- Opt for the ‘réel simplifié’ tax regime
Did you know? What is the difference between LMNP or LMP?
If you meet all the criteria above, but your rental income exceeds 50% of your total income, you will be classified as a Professional Furnished Lessor (LMP).
What are the tax benefits of LMNP status?
With LMNP status, you benefit from a number of tax advantages:
- Deductible VAT (20% on the total value of the property) when you invest in a newly built tourist residence
- Offset of mortgage interest and management costs
- Guaranteed rental income, regardless of whether the property is rented or not
- All investment-related charges are deductible from rental income:
- Purchase costs (notary’s costs, set-up costs,…). The deduction of these costs may be spread over a maximum of 5 years in equal fractions. They may also be deducted in a single financial year
- Property tax
- Loan interest relating to the purchase
- Management costs (accountancy, legal advice, etc.)
- Service charges
- Accountancy fees
- Depreciation of property and furniture
Did you know?
Investing in LMNP allows you to earn additional income. Thanks to depreciation, the status of Non-Professional Furnished Lessor removes the need to pay tax on the income received. Another key benefit: lettings are not restricted by rent or income ceilings for the tenant, or by geographical zoning.
It is therefore an ideal long-term investment for :
- Generating an additional income and enjoy your holiday home for a few weeks a year
- Planning for your retirement
- Creating a financial cushion
- Increasing your financial assets
- Providing security for your loved ones
How does the depreciation deduction work?
With furnished lettings, you can deduct up to 85% of the property value of your acquisition, excluding the value of the plot (12.5%), as well as 100% of the cost of the furnishings.
Depreciation under the LMNP scheme is calculated on a straight-line method over the normal period of use of the property:
- 5 to 10 years as standard for furniture and fittings on the basis of the ex-tax purchase price
- 30 to 50 years for the property
By depreciating your property and its furnishings, you can reduce your taxable income and social security contributions to zero. For accounting purposes, depreciation is deducted every year. However, for tax purposes it is only deducted up to the amount of the rental after other costs have been deducted, the excess being carried forward without time limit. In no case may depreciation contribute to a loss.
LMNP: why invest in an MGM tourism residence?
To own a premium, serviced property
Our tourist residences offer top-of-the-range furnished flats. Created in traditional mountain chalet style these flats offer a warm and comfortable environment, with spacious rooms designed to welcome natural light.
The MGM flats are also built from the finest materials, ensuring that the structure is perfectly solid and durable. They feature contemporary lines that emphasise the space in each room..
In MGM residences, you also benefit from a wide range of ‘hotel-like’ services: reception, lounge, interior furnishings, maintenance, as well as a swimming pool, sauna, hammam, relaxation and leisure area...
Make the most of the beautiful mountain locations
Our residences are located in some of the finest ski resorts in the Alps: Flaine, Val Cenis, Valmorel, Samoëns, Les Carroz d'Arâches, Chamonix Mont-Blanc... This exceptional location makes your property even more attractive. The resorts that host our residences have been selected for the beauty of their scenery and their ability to satisfy all members of the family.
Choosing the right location within the resort has also been a decisive factor in the construction of our residences. Whether you choose to buy a flat right next to the slopes or in the centre of the resort, you can be assured of a good return on your investment. That is an extra guarantee that your investment will be worthwhile.
Leave the management of your property to an established and experienced professional.
Investing in an MGM tourist residence under the LMNP scheme also means you don't have to worry about all the formalities involved in renting out the property. After signing the rental lease, MGM Hôtels et Résidences will be responsible for managing your property. We entirely manage the care and maintenance of the property, its furnishings and marketing, as well as the inventory of fixtures, visits and collection of rent. As an MGM property owner, you do not have to deal with anything, and you can enjoy your holiday home for several weeks a year.
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