Understanding the LMNP (Non Professional Lessor of Furnished Premises) tax system when investing in a tourist residence

Who is concerned ?

This way of investing is dedicated to people wishing to constitute a secure patrimony and to get additional incomes free of income taxes.

How can I benefit from this tax system ?

By purchasing a furnished property in a classified tourist residence.

You will then sign a commercial lease with a management company for a minimum of 9 years.

By doing so, you will benefit from :

• The payment of a guaranteed and index linked rental income for a minimum of 9 years
• The refund of the VAT on your purchase:19.6%
• High tax cuts from your rental incomes (see explanation below))
• The possibility to enjoy your apartment for several weeks each year
• Hassle-free management of your property

How will I get tax cuts on my rental incomes ?

Each year, when making your income tax declaration, you will have the possibility to offset the following elements from your rental incomes :

• Purchase fees (Notary Public/only to be deducted the first year).
• Interests on your mortgage (if you contract one)
• Co-ownership charges
• Land tax
• Amortization of your property (excl. land) for a period of 30 years , or in other words a deduction of 3.33% per year based on the value of your property
• Amortization of the furniture for a period of 10 years, that is to say a deduction of 10% per year based on the value of the furniture

Important point : note that the tax deficit generated by the amortization (property and furniture) is cumulative and reportable indefinitely on your rental incomes.

Thus, according to your purchase plan, this system enables you to get rental incomes net of taxes on the long-term (for a period of time between 15 and 30 years).

This fiscal advantage, which can only be achieved through the LMNP tax system investment, is an ideal solution for a tax free additional income on top of pension benefits.

How is your apartment managed on a daily basis?

The Group Lagrange commits, through a commercial lease, to :

• pay you index linked rental incomes determined in advance, whether your apartment is rented out or not.
• maintain the premises in a good state, at its own expenses, and to proceed to eventual repairs in the privative parts (except for major repairs as stipulated in Article 606 of the Civil Code).

A residence manager (Employee of the group Lagrange) is in charge of welcoming the holidaymakers, the good state of the residence, the surveillance and the maintenance of your apartment.

Thus, you can completely enjoy your apartment with a hassle-free management.

How does the Group Lagrange choose the locations for its residences ?

With an experience of more than 40 years in the tourism industry, the Group Lagrange has a unique expertise on the market thanks to its three additional and complementary activities :

• Tour operator: European leader in selling holiday stays in tourist residences in France, Lagrange works with 8,000 travel agencies all over Europe and distributes over 3 million brochures
• Major actor regarding the management of tourist residences (more than 170 residences managed in France)
• Development and marketing of classified tourist residences

Strategy of the Group Lagrange: :

• To conceive and to develop residences in order to manage them on the long-term

This objective imposes a careful selection in terms of locations in order to answer the rental demand identified thanks to the three activities of the Group Lagrange.

It is this “managing” approach in the choice of the locations that provides the owners with a good investment, secure and long-term rental incomes, high potential for resale, or valorisation throughout the years without any major difficulties.

Why do investors choose the Group Lagrange ?

• 1 / The excellent location of the programmes :
  «…The rarity of well located sites (ski in / ski out, close to a beach,…) guarantees the valorisation of the investment on a long-term period …»
• 2 / The top-of-the-range quality of facilities offered :
  «…This new generation of residences (with heated swimming pool, sauna, steam room, reception, hotel like services,…) is the answer to a specific demand and to a change of the holidays’ habits (shorter but more comfortable stays) …»
• 3 / The constant evolution of the top-of-the-range tourist industry :
  «…A French and foreign clientele oriented towards “up-market holidays”, less sensitive to the increase of the cost of transportation, and which privileges above all the location and the services which are offered …»
• 4 / The contractual guarantee of index linked rental incomes paid by the Group Lagrange :
  «…everyone has also the possibility to choose its own rental incomes thanks to an “à la carte” personal usage …»
• 5 / The incomes generated by a valuable property :
  «…The tax-system linked to this sort of properties enables to generate tax free rental incomes and is thus ideal for people who want to constitute themselves valuable assets as well as additional incomes …»
• 6 / The Lagrange residences are approved for SIPPs :
  «…Instead of investing on a market where values can change drastically in a few days, thanks to its English and Irish based partners, the Group Lagrange offers you the possibility to invest through your pension plan and to get a secure income. Not to mention the capital gain you will make on your property (free of taxes after 15 years) if you wish to sell it …»

Feel free to contact us for a personalised study