Old LMNP purchase: a genuine retirement investment with tax-free income

International clients regularly contact the Sextant group to offer the resale of properties they purchased off-plan under the LMNP status (Non-Professional Furnished Rental).

February 28, 2013 · Updated April 8, 2020

International clients regularly contact the Sextant group to offer the resale of properties they purchased off-plan under the LMNP status (Non-Professional Furnished Rental). These properties are particularly sought after by French clients as they are relatively affordable (from £50k to £150k on average). They are easy to manage thanks to commercial leases signed with management companies who handle finding tenants, maintaining the residences and apartments. These companies also guarantee the payment of rent throughout the entire lease term, with a duration of between 9 and 11 years (renewable).
Here is a brief summary relating to LMNP purchases for resale:
Principles and conditions of application
If your annual rent is less than £23,000 or represents less than half of your household’s professional income, you must declare this rental income under the BIC tax regime (Industrial and Commercial Profits). An accountant carries out this type of operation (management of tax accounts) for approximately £250/year
Types of Service Residences
• Student residence
• Tourism residence
• Business residence
Tax advantages of LMNP purchases
• Deduction from your rental income: 100% of operating costs and taxes (rental charges, loan interest, operation setup fees, property tax, etc.).
• Amortisation of your property over a period of 20-30 years or more, furniture over a period of 5-7 years and establishment costs over a period of 1-5 years.
• Recovery of VAT when properties are sold new and only for residences providing specific services (art. 260 D CGI)
• If the investment is made in a service residence, the investor benefits from a commercial lease securing the rental income for the duration of the property holding and managed by the operator.
Results
A non-taxed rent on a very long-term basis, and property assets built up at minimal cost – ideal for generating a retirement top-up that will still exist in 10, 20 or 30 years.