Letting furnished in Nice: the LMNP regime explained

Furnished letting appeals to a growing number of Nice owners, and for good reason: rents that are generally higher than those of unfurnished lets, sustained tenant demand all year round and a tax framework that is often more flexible. Behind these advantages, however, lies a precise set of rules — far better understood before you begin than discovered after your first tax return.

At the heart of the matter sits the non-professional furnished landlord status — the well-known "LMNP", the French non-professional furnished letting status. Cabinet Immobilier Nice sets out its principles here: what distinguishes furnished from unfurnished letting, how the choice between micro-BIC and the régime réel is made, why depreciation so often changes the picture and which obligations fall to you. We have deliberately chosen to present the mechanisms without quoting thresholds or rates: those figures are amended regularly by the annual finance acts, and only your own adviser can confirm the ones in force at the time of your project.

The difference between the two formulas does not lie solely in the presence of furniture. It touches the tenancy agreement, the day-to-day management rhythm and, above all, the tax category your rental income falls into. That last point is decisive: it determines the entire body of rules that will apply to you.

• The tenancy: unfurnished letting is built around a long-term commitment, whereas furnished letting sits within a more flexible framework, with shorter terms and formats suited to students or to professional mobility.
• The tax treatment: income from an unfurnished let is taxed as property income (revenus fonciers), while income from a furnished let falls under industrial and commercial profits (bénéfices industriels et commerciaux, or BIC). Two entirely distinct sets of rules.
• The rent level: a furnished home generally commands a higher rent than an equivalent unfurnished one, in return for equipment that must be provided, maintained and renewed.
• The management: because tenants change more frequently in furnished lets, the role calls for a more active organisation — inventories of condition, refurbishment between tenancies, re-letting and monitoring of the furniture schedule.

To qualify as furnished in the eyes of the law, a property cannot make do with a handful of mismatched items. It must allow the tenant to move in and live there immediately, bringing nothing but their personal effects. A decree sets out the list of items of equipment that must be present. Incomplete furnishings expose the landlord to the tenancy being reclassified as an unfurnished let — with all the legal and tax consequences that entails, including the loss of the tax regime chosen.

• Complete bedding, including bed covers, and a means of blocking out light at the windows in rooms intended for sleeping.
• Kitchen equipment in working order: a hob, an oven or microwave oven, and a fridge with a freezer compartment.
• Crockery and kitchen utensils in sufficient quantity for the intended number of occupants.
• A table, seating, shelves or storage, and light fittings in every room.
• Cleaning equipment appropriate to the property.
• A detailed inventory of the furniture, annexed to the tenancy agreement and signed by both parties: this is your best protection in the event of a dispute.

"LMNP" refers to the owner who lets one or more furnished properties without that activity amounting to their principal occupation under the relevant tax criteria. It differs from the professional furnished landlord status (LMP), which carries its own entry conditions, its own treatment of losses and a different social security regime. Moving from one status to the other depends on the level of receipts and on their weight within the household's overall income: since those criteria may change, they deserve an annual review.

Contrary to a widespread belief, LMNP is not an arrangement reserved for insiders. It is the ordinary position of the great majority of private individuals letting a furnished studio or one-bedroom flat. It requires neither a company nor any particular legal structure. What it does require is rigour: registering the activity, keeping track of receipts and expenses, and making a considered choice of tax regime from the very first year.

Once your rental income is treated as BIC, two tax regimes are open to you. This is probably the single most important decision of your letting project, because it governs the net return you will actually keep.

Le micro-BIC

A simplified regime, available for as long as your annual receipts remain below a ceiling that varies according to the nature of the furnished let. You simply declare the amount received and the tax authorities apply a flat-rate allowance intended to represent your expenses: no supporting documents to produce, no accounts to keep. Simple, but flat-rate: if your actual expenses exceed the allowance, you are taxed on a profit higher than the one you genuinely made.

Le régime réel

You deduct your expenses at their actual amount — loan interest, insurance, property tax, service charges, maintenance works, management fees, accountancy costs — and you depreciate both the property and the furniture. More demanding administratively, it often proves markedly more favourable where the property is financed by a loan, has required works or carries high running costs.

Le point de bascule

There is no universal answer. The most advantageous regime depends on how you have financed the purchase, on the level of your expenses, on the type of letting you practise and on your personal tax position. The calculation is made case by case — and made again whenever your circumstances change.

Les règles d'option

Moving to the régime réel results from a formal election, subject to deadline conditions and to a minimum commitment period, with tacit renewal thereafter. Getting the timing wrong can deprive you of the regime you wanted for an entire tax year: this is a point to secure with a professional before your first return.

Depreciation consists in recognising, in the accounts, the loss in value of the property and its equipment over time. The home is broken down into components — structural works, roof, technical installations, fixtures and fittings, furniture — each of which depreciates over its own period. The land itself is not depreciated. This charge is purely an accounting one: it costs you nothing in cash terms, yet it reduces your taxable profit. A frequently observed outcome: rent collected every month for a low, or even nil, taxable result over several years.

Two important qualifications. First, depreciation cannot create or deepen a loss: the unused portion is not lost but carried forward to subsequent financial years. Second, it has consequences on resale, the treatment of which has been the subject of recent legislative change. The genuine value of depreciation must therefore be weighed across the whole period of ownership, resale included, and not on the first year alone.

Letting furnished means carrying on a registered activity. The formalities are straightforward, but they are not optional.

• Register the start of your furnished letting activity with the business formalities portal (guichet des formalités des entreprises), which allows you to obtain a SIRET number.
• Declare your rental income each year under the BIC category, on the supplementary return provided for that purpose.
• Under the régime réel, keep accounts and file a full set of tax accounts: in practice, this task is almost always entrusted to a chartered accountant.
• Pay the business property levy (cotisation foncière des entreprises) where applicable, certain situations giving entitlement to an exemption.
• Comply with local regulations: for short-term furnished letting, the City of Nice imposes specific procedures, and authorisation for a change of use may be required depending on the case. The rules of the co-ownership must also be checked.
• Collect and pass on the visitor's tax (taxe de séjour) whenever you let on a seasonal basis.

Nice brings together the conditions of a particularly buoyant furnished letting market. The city welcomes a large student population, young professionals settling for a few years, executives on professional mobility and long-stay visitors drawn by the climate and the international airport. This variety of profiles makes it possible to let all year round, provided the property and its neighbourhood are well chosen.

• Students look for functional studios and one-bedroom flats close to the campuses, the tram lines and lively districts such as Libération, Gambetta or the Old Town.
• Young professionals favour the centre, the Port and the area around the station, with high expectations as to the quality of the fittings and the natural light.
• Professionals on assignment or on the move appreciate flexible arrangements over a few months, in a home ready to live in straight away.
• International clients, a strong presence on the Côte d'Azur, sustain demand for medium and short stays, complementing conventional letting.

The LMNP regime can apply equally to a year-round furnished let and to a seasonal let, but the two activities share neither the same constraints, nor the same management rhythm, nor the same local regulations. Our lettings management service handles long-term furnished letting: selecting applicants, drafting the tenancy agreement, drawing up the furniture inventory, carrying out inventories of condition, issuing rent receipts, monitoring technical matters and managing the relationship with the tenant. For seasonal letting, our sister brand La Joyeuse Conciergerie manages the whole cycle — listings, welcoming guests, cleaning, linen, maintenance and compliance with the reporting duties specific to tourist furnished accommodation. Depending on your property, your availability and your return objectives, we will help you decide which of the two formulas makes the most sense.

LMNP is an advantageous regime, but a technical one. The choice between micro-BIC and the régime réel, the calculation of depreciation, the monitoring of thresholds and the preparation for resale all call for a personalised, numbers-based analysis. We invariably recommend having your strategy validated by a chartered accountant or a tax adviser before the property is put on the market, then reviewing it periodically. In most cases the cost of that support is amply offset by the optimisation it makes possible — and it is itself deductible under the régime réel.

Are you considering letting a furnished property in Nice? Cabinet Immobilier Nice supports you from the rental valuation through to day-to-day management, guiding you towards the formula best suited to your project. Our teams, based at 8 avenue Auber, are at your disposal to discuss it.

Disclaimer: this article is intended as general information and constitutes neither tax advice nor personalised legal advice. Regulations and tax regimes change regularly. Before taking any decision, have your position validated by a chartered accountant or a tax adviser.