Furnished Rental as a Sole Proprietor: The Best Status?

Investing in furnished rentals under the status of a sole proprietor allows for advantageous income. Both the tourist furnished rental sector and the long-term furnished rental sector offer profitable investments and substantial income. Discover in this article our best practical tips for operating furnished rentals as a sole proprietor.

How to choose the most advantageous tax regime for furnished rental property owners?

Let's first examine the different possibilities to maximize the profit from your real estate investment, depending on your situation.

LMNP, its advantages and limitations

Advantages: This tax status of Non-Professional Furnished Lessor is reserved for private owners who wish to offer their furnished property as tourist accommodation. This practice concerns individuals who offer their apartment or house for rent. Their main goal is to optimize the amortization of their mortgage or to generate additional income. This activity, subject to income tax, concerns individuals. The total amount of annual rents must be less than €70,000. Their earnings benefit from a tax deduction of 50%. Therefore, only half is taxable.

Limitations: Social security contributions from these various activities cannot be subtracted from the basic rate for tax calculation. Therefore, if your expenses exceed 50% of your income, it is better to opt for the actual regime. This regime allows you to deduct your contributions such as loan interest, amounts for work carried out, miscellaneous expenses such as those related to the administration of your property. These include co-ownership fees, management fees, facade renovations, management fees, property tax.

SCI, some constraints to protect your assets

Definition: The civil real estate company consists of at least two investors. They can be relatives, children, spouses, or part of a circle of friends. The SCI is defined as a commercial activity, like an LLC, SAS, or SA, but must concern a non-commercial object.

Advantages: each participant owns a share of the SCI. This solution avoids co-ownership. It offers each member the possibility to withdraw from the company under the conditions set by the statutes. A majority of co-owners is not required to make a decision.

The micro-enterprise, an advantageous choice for the professional furnished lessor activity

The practice of furnished rentals is now accessible to micro-entrepreneurs. In addition to the simplicity of registering as a sole proprietor, this individual regime offers many other prerogatives.

Advantages:

Practicality: the micro-entrepreneur regime for renting real estate benefits from simplified tax and accounting reporting requirements. You only pay social security contributions based on your income. If your turnover is equal to 0, you have no charges to pay.

Thresholds: the activity of a furnished lessor carried out under the sole proprietorship status is allowed up to a threshold of €176,200.

Taxation: a flat-rate allowance of 50% for expenses and charges applies to turnover. Additionally, you benefit from the VAT exemption up to a turnover of €85,800. However, invoices issued must specify the following: "VAT not applicable, article 293B of the CGI." Note, however, that you will not be able to recover VAT from your suppliers.

Activity combination: the status of a micro-entrepreneur allows you to combine various activities within the same structure. Indeed, you can exercise the function of a furnished lessor and combine it with another. These various activities do not necessarily have a relationship between them. However, be careful not to exceed the thresholds set.

Can I consider combining the micro-entrepreneur regime with the LMNP regime?

This possibility is entirely possible. You can indeed simultaneously carry out the activity of LMNP and furnished tourist rental as a micro-entrepreneur. To ensure that the threshold is not exceeded, it is necessary to consider the sum of the turnovers of the two activities and verify that there is no excess. In the case of two activities subject to different thresholds, it is necessary to examine whether each of the two activities does not exceed its own threshold. The activity with the lower threshold is included in the calculation of the one with the highest threshold. Is this explanation not sufficient? You will find here all the necessary details for your understanding.

What are the conditions for operating furnished rentals as a sole proprietor?

Your request to create a micro-enterprise must be validated with the Business Formality Center (CFE) to which you belong. This procedure is valid for all sectors of activity. Nevertheless, it is mandatory to meet certain criteria. You must in particular:

be of French nationality and reside in France. You must provide proof of official identification to the tax authorities. For this, you can produce an identity card or a valid passport,

have reached the legal age of majority and be over 18 years of age, or be a minor, between 16 and 18 years old, who has obtained emancipation by court decision,

be able to make decisions, i.e., not be under guardianship or curatorship in order to fully exercise your responsibilities as a sole proprietor,

be fully in possession of your citizenship rights. You must not be subject to any criminal or delinquent prohibitions that exclude you from the possibility of exercising company administrator functions.

What steps do I need to take to register as a sole proprietor for property management?

The procedures for creating a micro-enterprise are simple. They are carried out online on the URSSAF website in 5 steps:

Creating your account. This process is done using your email address and your social security number. You then set a password that allows you to access your file later.

Filing the declaration is done by completing the form on which must appear:

the information necessary to define your business (field of activity, spouse's status, liberal, commercial, or artisanal regime),

your personal information (you must upload the reference identity document, valid),

the options chosen regarding the payment of your social security contributions and social security levies.

Sending the declaration request for registration results in the examination of your file by the CFE (Business Formality Center) to which you belong.

You will receive within 8 to 15 days:

your affiliation certificate to the micro-enterprise regime,

your allocation numbers:

Siret (composed of the 14 digits of the Siren number with 9 digits plus the 5 digits of the NIC (Internal Classification Number)),

TI (independent worker).

The start date of your activity coincides with the date of your declaration on the administration's website.

Good to know: your Siret number must appear on your invoices. However, you can start your activity before obtaining your registration number. Simply note on the invoices: "Siret allocation in progress."

What social security contributions will I be subject to as a furnished

The sole proprietorship regime is characterized by its ease of management. The declaration and payment of social security contributions are done simply online. The amount of fees to be paid is displayed as soon as the declared turnover is entered. Thus, the sole proprietor knows instantly what he will have to pay at the time of the deadline. This can be monthly or quarterly, depending on the choice made at the time of registration with the local CFE.

The social security contributions of the sole proprietor who performs long-term or seasonal furnished rentals are proportional to his turnover. This must be declared, only online, directly on the URSSAF website, monthly or quarterly depending on the choice made at the time of registration. Payment is also made online by bank transfer or credit card. The declaration of the turnover amount is done only electronically. Make sure to pay your contributions by the due date, regularly. In case of forgetfulness or delay, you may have to pay penalties which correspond to 0.2% of the undeclared or late paid turnover. To know the amount you will have to pay according to your revenues, you can consult the URSSAF furnished rental simulator.

The Colonies Solution

Reinventing the codes of today's housing and designing the housing of the future is Colonies' ambition. We specialize in coliving in Europe. This booming sector offers shared spaces to its occupants while maintaining their privacy. Our experts accompany you throughout your furnished rental journey. Entrust us with your project. Thanks to our personalized support, we will celebrate together your success as a sole proprietor.