In recent years, furnished rentals, whether seasonal or annual, have become particularly attractive for many property owners in France. However, it’s important to know that this activity is subject to certain obligations. If you exceed certain income thresholds or if you carry out this activity professionally, it entails both social and fiscal implications. To avoid any mistakes in your declarations, it is imperative to properly understand social contributions.

To help you with this, this article offers an overview of the main information you need to master for optimal management of your professional furnished rental activity.

Professional Furnished Landlord: What are the Criteria to Obtain this Status?

According to French legislation, two conditions are necessary to be considered as an LMP:

• your rental income must exceed €23,000 per year. This threshold concerns gross income from furnished rentals. If your income is lower, you will automatically be classified as a non-professional furnished landlord;
• your rental income must represent more than 50% of your household’s professional income. This means that the furnished rental activity must be your main source of income compared to your main professional activity or other sources of income.

These criteria aim to distinguish non-professional furnished landlords from professionals. Be aware that once this status is obtained, it comes with, for example, the payment of social contributions.

What are the Social Contributions Required for LMP?

You may not know this, but as a professional furnished landlord, your income from this activity is considered, in the eyes of the State, as industrial and commercial profits (BIC). LMPs, as such, are subject to the self-employed regime. Consequently, they must pay social contributions.

How are these Social Contributions Calculated?

For a professional furnished landlord, these contributions are calculated based on the taxable net income from the furnished rental activity. However, it is essential to know that the contribution rate varies according to income. It is generally between 35 and 40% of the net profit. This percentage includes the following contributions:

• professional training;
• family allowances;
• health and maternity insurance;
• basic and complementary retirement.

The exact amount of your contributions will depend, however, on the regime you have chosen: the simplified real regime or the micro-BIC. The choice between these two regimes, be aware, will directly influence the basis for calculating your social contributions.

When to Choose the micro-BIC Regime?

This regime is ultimately provided if annual rental income does not exceed €77,700. The micro-BIC offers a flat-rate deduction of 50% on income. This gives professional furnished landlords the possibility of a more than significant reduction in their taxable net income and, therefore, their social contributions. However, this regime is not always the most advantageous, as the deduction is often insufficient to cover certain real expenses.

When is the Simplified Real Regime most Profitable?

This regime is usually more suitable for landlords with significant deductible expenses, such as:

• management fees;
• loan interest;
• depreciation.

In the case of the simplified real regime, social contributions are calculated on the net profit, once all expenses related to the activity have been deducted. As you can understand, the simplified real regime is likely to offer great flexibility. However, it requires rigorous accounting, as well as rather heavy administrative procedures.

The French Riviera: a Fiscal Framework not to be Neglected for Professional Furnished Landlords

In certain regions such as the French Riviera, the activity of professional furnished rental providers is particularly dynamic. Cities like Nice, Cannes, or Villefranche-sur-Mer present a very strong potential for seasonal rentals. These urban areas indeed attract an ever-growing international clientele throughout the year. Do you own a property in this region? Are you also looking to maximize the profitability of your investment, but find yourself short on time? Given the numerous constraints of the professional furnished rental business, it may be beneficial for you to use a concierge service. Although fiscal and social obligations fall directly on property owners, seeking assistance can be an excellent alternative for those feeling overwhelmed or having little time due to other activities. Bnb Groom Services is able to support professional landlords in the daily management of their properties. As an expert in rental management, this specialized concierge service will thus be able to lighten their operational loads, allowing them to focus on the tax optimization of their accommodations.