When you operate a property as a Loueur en Meublé Non Professionnel (LMNP), you benefit from a number of tax advantages that make it an attractive choice for many investors. However, it's crucial to understand the tax implications of your status, particularly with regard to the Cotisation Foncière des Entreprises (CFE).
What is the CFE?
The Cotisation Foncière des Entreprises (CFE) is a local tax levied on companies and professionals carrying out economic activities in France. Although LMNP status is generally associated with non-professional furnished rental, certain circumstances may make you liable for CFE.
The determining criteria
As an LMNP, you will not automatically be liable for CFE. The following factors will play a key role in determining your payment obligation:
1. Sales threshold: If your annual rental income exceeds a certain threshold, you may be liable for CFE. It's crucial to keep a close eye on your revenues and make sure you stay within the established limits.
2. Frequency of rental: If you rent out your property on a frequent and regular basis, this could be considered an economic activity in the eyes of the tax authorities, which could make you liable for CFE.
3. Advertising and services: Offering additional services such as cleaning, linen, etc., as well as increased advertising for your rentals, could also influence your CFE status.
The consequences of the CFE for LMNPs
If you're liable for CFE tax as a result of your furnished rental activity, you'll have to pay this tax annually. The amount of CFE depends on various factors, including the cadastral rental value of the property, the commune in which it is located and local tax rates.
How to prepare?
To avoid unpleasant CFE surprises, it's essential to keep a close eye on your rental income, and take into account the criteria that could trigger the obligation to pay the tax. Consulting a chartered accountant or tax professional who specializes in LMNPs can be a wise move to ensure that you meet your tax obligations and optimize your status.
In conclusion, the Cotisation Foncière des Entreprises (CFE) can be an important consideration for owners of non-professional furnished rental properties (LMNP). Understanding the determining criteria and consequences of the CFE can help you better manage your rental business and avoid any future tax problems.
