A property owner renting out a furnished property without exceeding certain revenue thresholds falls under the status of a non-professional furnished rental (LMNP). Their rental income is categorized as industrial and commercial profits (BIC), not property income. This distinction determines the form to fill out, the applicable tax regime, and the boxes to check on the income tax declaration.
Form 2042 C PRO: the basis of the LMNP declaration
The declaration of furnished rental income is not done on the standard 2042 declaration. The form to use is the complementary declaration 2042 C PRO, reserved for income from non-salaried professions and BIC.
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On impots.gouv.fr, this form is added to the main declaration during online entry. You must check the corresponding section in the annex selection step. Many declarants forget this step and look for the BIC boxes on the standard form, where they do not exist.
Before even filling out this form, any furnished rental activity must have been declared to the INPI single window to obtain a SIRET number. Without this number, the tax administration cannot associate the income with the correct taxpayer. The steps available on the Investisseur Débutant website for beginners detail this registration procedure.
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Micro-BIC regime or real regime: direct impact on the boxes to fill
The choice of tax regime determines the complexity of the declaration and the amount of tax. The two options do not use the same boxes or the same supporting documents.
Micro-BIC: only one box to fill
The micro-BIC regime applies by default when annual revenues remain below the legal threshold. The declarant reports the gross amount of their collected rents in box 5ND (or 5PD for the spouse) of form 2042 C PRO. The administration then automatically applies a flat-rate deduction on this amount.
Since the finance law for 2024, the access conditions and deduction rates have been modified, particularly for tourist rentals. The trend is towards the restriction of these benefits, with lowered thresholds and reduced deductions compared to previous rules.
Real regime: an additional tax package
The real regime requires more extensive accounting work but allows for the deduction of actual expenses and property depreciation. The declarant must produce a tax package (forms 2031 and 2033) before reporting the result on the 2042 C PRO.
Deductible expenses under the real regime include:
- Loan interest, borrower insurance, and bank processing fees related to the financing of the property
- Maintenance work, management fees, property tax, and non-recoverable condominium charges
- Depreciation of the real estate, furniture, and any improvement work, calculated over their useful life
- Fees for an accountant or an approved management center
The net result (income minus expenses and depreciation) is reported in box 5NA of the 2042 C PRO. If this result is negative, the deficit in LMNP can only be offset against the furnished rental income of the following years, not against the overall income.
Common errors in the declaration of furnished rental income
Three errors frequently occur during filling out and generate requests for correction or follow-ups from the administration.
The first concerns the form itself. Declaring furnished rents as property income (boxes 4BA or 4BE of the 2042) instead of the 2042 C PRO skews the tax calculation. Property income and BIC do not benefit from the same deductions or mechanisms.
The second error relates to the amount declared in micro-BIC. Some declarants deduct the allowance themselves before filling in box 5ND, whereas the amount to report is the gross figure of the rents received. The allowance is calculated automatically by the tax service.
The third error concerns the real regime: forgetting to submit the tax package 2031/2033 on time. The form 2042 C PRO alone is not sufficient. Without the package, the administration may challenge the benefit of the real regime and automatically apply the micro-BIC.
Requalification to LMP during a tax audit: a risk to anticipate
The boundary between LMNP and professional furnished rental (LMP) is based on two cumulative criteria. The landlord transitions to LMP if their annual rental income exceeds 23,000 euros and if this income exceeds the other professional income of the tax household.
Recent administrative doctrine and several court rulings show a trend towards more frequent requalification of LMNPs to LMPs during audits. This transition radically changes the tax treatment: the LMP is subject to social contributions on profits, and the capital gains from the sale of the property fall under the professional regime.
To avoid this requalification, the declarant must verify each year that their furnished income remains below the double threshold. An investor owning multiple furnished properties must sum all income from the entire tax household, not just that of a single property.
The Climate and Resilience Law adds an indirect parameter: the freezing or capping of rents for properties classified F or G on the energy performance diagnosis can keep income below the 23,000 euro threshold but also reduces the property’s profitability.
This point deserves consideration in the choice between micro-BIC and the real regime, as lower revenues sometimes make the flat-rate deduction more advantageous than the deduction of high actual expenses.