Yes LMNP for me in my name but it is capped at 23k revenue by year.
What is the difference with LMP, is it more advantageous to be classed as professional?
And do you do the flat reduction of 50% or the real accounting of the costs?
I am doing the real accounting of the costs with an accountant. It’s more interesting in my case as I can report a deficit for 10 years and pay no tax on rent.
Most private individual investor want to avoid to be classified as professional in order to not pay social charges (30-50%). It’s not an official source but it resume the pros and cons nicely.
A SCI is a usually not compatible with the LMNP and LMP.
It’ll automatically exclude the IS status (accumulating) and will let you only with the IR status.
However it should represent less than 10% of the global income.
If it’s not an oocasional practise, you will have to change the taxation to IS.
You may want to create a SARL Immobiliere
@FunnyDjo, really appreciate you taking the time to provide such valuable information.
The 23000 threshold to stay with LMNP will be difficult for me as there is 1000€ from two commercial shops and there at 3 x F5 apartments, which will rented out for around 800€ each
Wonder if it is possible to rent one unfurnished and thus stay under the threshold. Is this possible and is the commercial rental income also included for the threshold.
Yes definitely because the fiscal status is defined by the rental contract with the tenant.
It means you can change status only when you change tenant as it won’t apply to existant contract.
You will need to meet the minimum furnitures required to be accepted as furnished.
This tax status is for flat only and not commercial unit.
Nice to find a rental property that make economic sense with this rate.
What type is your investment ?
Is it an independent building ?
In which city have you plan to invest ?
Was at a French accountant today and he has confused me in terms of the tax that might have to pay.
I told him I am a non-resident working in Switzerland and want to buy a building with three apartments to rent out.
He said, that my tax bracket will be determined by the income from France + my salary in Switzerland. If this is the case then my tax will be huge in France.
Can someone confirm this is correct? I hope he is mistaken.
Makes sense to me.
That’s how it’s done here in CH too.
All your worldwide incomes determine the tax rate.
This tax rate is then applied to the CH income (assuming that the rest is being taxed at source country; DTA)
The key difference is here in Switzerland I am a tax resident.
I also have a property in the UK and do my tax return there but they do not take my Swiss salary into account for the tax rate.
Ah sorry, your “non-resident” above was for France, not Switzerland - my bad. 
That’s correct for individual taxation.
It’s not that simple, it actually depends on the amount of income you have. You choose between two schemes, either the average rate (the one you describe) or the minimum / progressive rate. In the latter case If you earn less than 27k you can choose to be taxed at 20% flat + 7.5%. However you would not need to pay a lot the first years. i.e. if you have a mortgage / some amortizations, etc. those can be deducted from the rental income so the profit should be at best minimum if not negative. This is a complex topic with many different schemes and it changes often (maybe twice per political term (5 years in France)). That’s also one of the reasons why I decided to go for a SCI with corporate tax, at least the way a corporate profit is calculated never changes and this activity does not impact my taxes in CH.
The rate calculation for alien individuals is described here if you need more info Qu'est-ce que le taux moyen ? Puis-je en bénéficier ? | impots.gouv.fr
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Thanks for the valuable feedback. The links are great to get a deeper understanding of the possibilities.
Did you source the mortgage through a broker in France or did you get it from a Swiss bank.
I have tried several banks and all have declined, most citing that it is not my main residence or second home.
How did you set up your SCI, was it through an accountant or notary?
I don t own Real Estate, only shares in SCPI which I bought with a credit through the SCI. The credit was done through my bank in France back when the rates were low.
I created the SCI through a lawyer, an accountant or a notary can also do it for cheaper but they are not law expert, those are two different jobs. My situation was a bit special so I took a lawyer however in any case seek someone to advise you, don’t think that copying bylaws from the Internet is a smart move as correcting them later on if will be expensive.
I am having some difficulty finding a bank who will finance the project as I live on Switzerland.
Has anyone got a mortgage from a Swiss or French bank as a non-resident for an investment property in France.
The ones contacted won’t do it as it is not my second home.
The building has two commercial and 3 apartments
I have avant registered at Credit a mutuel and crédit agricole Annemasse. I used both of them for my ongoing mortgage. I am French citizen so I think it has eased the process.
Hi Again
I managed to find a Swiss bank willing to lend, but with a down payment of 40% 
But since this is the only bank so far, might have no choice but to go with it. The interest rate is 3% over 10 years. They also will fund it via SCI, so that is also a positive.
Can anyone confirm if my understanding of the the Tax in France as well Switzerland for SCI IS (cooperate) is correct:
French Tax:
- Taxed at 15%
- Property Tax
- Social Taxes (17.5%). Not sure if this is correct or even taxed.
- Deductions possible for Interest, Maintenance, management etc.
Swiss Tax:
- Tax based on value of shares in SCI IS
- No deductions for Interests ans maintenance
- Rental income not taken into account in Switzerland
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The 15% tax rate depends on the taxable profit which should be below 38k or something like that. Above that threshold that’s 25%
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Yes property tax (taxe foncière) depends on the city where the RE is located and is decided on a year basis.
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You won’t have to pay social taxes that’s only for individuals not for corporations.
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Any expenses can be deducted from the company profits (interests, accounting amortisations, etc.)
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As an individual you will be taxed only when you distribute dividends. Dividends are taxed at your tax domicile but France applies a source tax which can be retrieved through the DA-1 form in CH. Also if you have more than 10% of the SCI shares you will benefit from a reduced tax rate in CH
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SCI shares are wealth tax relevant in CH
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Dividends are taxed in CH (cf above)
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No other impact for you (no interest deduction, no rental income)
Thanks for the clarification, especially regarding the social tax. That was concerning me.
Regarding the dividends, if I have to put 150’000€ of my own money into the company. Does that mean that if I withdraw this there will be no dividends tax to consider.
How does the value of the shares get calculated. Let’s say the building is bought for 270’000€ + 100’000€ of renovations and my own contributions 150’000€ (loaned to the SCI)
Indeed if you invest 150k of your own money then you can get it back tax free, it’s considered a loan that you do to the company. You can also decide to have interests paid by the SCI which would decrease your corporate tax but this would be taxed in CH.
For a RE the value of the company is the residual value, i.e. value of the RE from an accounting point of view (could be complex if you have amortized part of the building) minus debts. In my case I only have SCPI in my SCI so it’s easy to calculate. Worst case scenario you send the company books with your taxes in CH and they correct whatever you calculated ^^.