LMNP 2026: the abolition myth, the real reform, and what actually changes for your tax position

Updated 20 October 2026. Reviewed by Samuel Hayot, chartered accountant (expert-comptable) registered with the Ordre des experts-comptables de Paris

The phrase "LMNP abolition 2026" has flooded French property forums and real-estate platforms since autumn 2024. It is inaccurate. The non-professional furnished-rental status (loueur en meublé non professionnel, LMNP) still exists. The micro-BIC and simplified real-expense regimes remain available. No legislation has abolished the LMNP framework.

What has changed, however, is real and structurally significant. Article 84 of the 2025 Finance Act (loi n° 2025-127 of 14 February 2025) modified the tax treatment of capital gains on LMNP disposals under the real-expense regime, for disposals made from 15 February 2025. Depreciation deductions taken during the holding period are now added back when computing the taxable capital gain. That is a major reform for long-term investors, but it is not the abolition of the LMNP status.

No, the LMNP status was not abolished in 2026. Non-professional furnished rental remains accessible under both the micro-BIC and the simplified real-expense regime. What the 2025 Finance Act changed is the capital gains calculation on disposal for landlords under the real-expense regime: depreciation deductions taken during the holding period are now factored into the taxable base, increasing the tax due on sale.

The mechanics before the reform (disposals before 15 February 2025)#

Under the old framework, a LMNP landlord on the real-expense regime benefited from a structural double advantage:

1. During the holding period: depreciation on the property, fixtures, and improvement works reduced taxable BIC (industrial and commercial profits) income, sometimes to zero.
2. On disposal: the capital gain was calculated under the standard private-individual rules (sale price minus acquisition price), without adjusting for depreciation previously claimed. Standard duration-based taper relief applied normally.

The result: the landlord deducted depreciation for years, then sold as if those deductions had never existed. French tax practitioners described this as a "double deduction", which is precisely why the legislature eventually acted.

What Article 84 of the 2025 Finance Act changed#

Article 84 of loi n° 2025-127 of 14 February 2025 (the 2025 Finance Act) amended the capital gain calculation for LMNP disposals under the real-expense regime. For disposals made from 15 February 2025, the acquisition price used in the gain computation is reduced by the depreciation previously deducted during the rental period, before the holding-period taper relief.

Technically, this produces a higher gross capital gain before applying the duration-based taper relief. The underlying legislative logic builds on Article 39 C of the Code général des impôts (CGI), which frames depreciation deductions for furnished rentals, and brings the LMNP disposal treatment closer (though not identical) to that applied to professional furnished landlords (LMP).

Time scope. Asked about this point, the Government answered (written question no. 10097, answer published in the Journal officiel on 24 March 2026) that the new regime applies to disposals made from the day after the law was enacted, whatever the date the property was first let: all depreciation deducted under Article 39 C CGI during the rental period is taken into account, including depreciation claimed before 2025. According to impots.gouv.fr, some properties located in serviced residences (for students, elderly people or people with disabilities) are not covered by the measure.

What has not changed: the private-individual capital gains regime continues to apply in full, including taper relief (full income-tax exemption after 22 years of ownership; full social-charges exemption after 30 years). Only the base for the gross gain calculation is modified.

Scenario: an apartment purchased in 2016 for €200,000, let under the simplified real-expense regime, with €30,000 of cumulative depreciation deducted over ten years, sold in 2026 for €280,000.

Computing the gross capital gain#

Rates and taper relief applicable at 20 October 2026: 6% per year of ownership from the 6th to the 21st year for income tax, 1.65% for social charges. Amounts rounded to the euro, excluding the surtax on net gains above €50,000 (Article 1609 nonies G CGI), due here in both columns. To be verified against your individual situation.

This additional cost of nearly €7,700 illustrates the real impact of the reform. For a portfolio of several properties, or where larger depreciation amounts have been claimed (significant renovation works, high acquisition price), the gap can be materially wider.

The most common scenario: the landlord "caught out" at disposal#

In the files we handle, the most frequent scenario involves a landlord who carefully built up depreciation year by year, sometimes on the advice of a wealth manager, without anticipating that those same depreciation amounts would be added back at the point of sale.

The 2025 reform does not change the logic of the deduction during the holding period. What it changes is the cost of exiting. This gap between the current benefit (reduced BIC income) and the deferred cost (higher capital gain) is one of the warning points we raise systematically in real-expense LMNP files, particularly for investors who are considering selling within the next five to ten years.

The underestimated risk: failing to recalculate net return after disposal#

Many LMNP profitability analyses present gross yield or after-tax cash flow during the holding period without factoring in the exit tax cost. Under the reformed rules, this omission is more expensive than before. The net return on a real-expense LMNP investment can no longer be assessed without simulating the capital gains tax impact of a future disposal, taking into account cumulative depreciation and the applicable gains regime at the intended exit date.

The LMNP status itself is not in question. Both tax regimes remain accessible.

Micro-BIC#

• Revenue threshold: to be verified according to the category of furnished rental (standard or tourist): the rules for tourist furnished rentals were separately amended by the law of 19 November 2024.
• Flat-rate deduction: 50% for standard furnished rentals (to be verified according to the applicable regime and category).
• No depreciation deductions: the 2025 reform on capital gains therefore does not affect micro-BIC landlords, who do not claim depreciation.

Simplified real-expense regime#

• Deduction of actual expenses and depreciation.
• Strong benefit during the holding period (reduced taxable income).
• Impact of the 2025 reform at disposal: depreciation deductions are added back into the capital gain calculation.
• Accounting obligation: regular bookkeeping, 2031 tax return, asset and depreciation schedules.

The 2025 reform has reignited a question many investors were already asking: is it more efficient to continue as a LMNP real-regime landlord, or to hold property through a company subject to corporate tax (SCI à l'IS, a société civile immobilière)?

Our reading: the SCI at corporate tax is not automatically preferable. It moves the tax problem rather than eliminating it: the gain on disposal of the property is subject to corporate tax without duration-based taper relief. The trade-off depends on the investor's profile, planned holding period, and estate-planning objectives, and must be modelled on actual figures before any decision is taken.

• Holding period and taper relief: the closer you are to full exemption (22 years for income tax, 30 years for social charges), the less sensitive the reform's impact, because the added-back depreciation also benefits from taper relief.
• Depreciation concerned: the tax administration targets all depreciation deducted under Article 39 C CGI during the rental period, whatever the date the property was first let (ministerial answer published in the Journal officiel on 24 March 2026). Depreciation you never deducted raises a separate question, to be reviewed with your chartered accountant on your own file.
• Tourist furnished rentals: micro-BIC thresholds and rules for tourist rentals changed separately under distinct legislation. Do not conflate the two reforms.
• Anticipated transmission: in the event of a gift before disposal, the rules governing the clearance of latent capital gains can materially alter the equation.

The tax administration (DGFiP) checks, in real-expense LMNP files, the consistency between depreciation deducted in annual returns (2031 liasse fiscale) and the fixed-asset schedule. On disposal, the cross-check between the depreciation schedule submitted and the add-back amount in the capital gain calculation is an identified audit point. A well-maintained file (updated depreciation schedules, full acquisition history, invoices for depreciated works) limits the risk of reclassification or a tax reassessment.

• Reconstruct the complete history of depreciation deducted since acquisition.
• Model the tax impact of a disposal at different time horizons (5 years, 10 years, 22 years).
• Consider whether the micro-BIC regime might be more advantageous for the remaining holding period: switching eliminates future add-back exposure, though it also removes the annual deduction benefit.
• If a sale is likely within two to three years, prepare a disposal tax estimate before signing a preliminary sale agreement.
• Consult a chartered accountant before any change of regime (switching from micro to real, or vice versa) that could alter your depreciation base.

For a deeper analysis, see also:

• Cotisation foncière des entreprises and LMNP: what you need to know
• Rental management and bookkeeping: legal obligations for property owners
• Should you set up a SCI to invest in property?

LMNP has not been abolished in 2026. That formulation, widespread and inaccurate, has generated a great deal of unnecessary anxiety. What changed is more targeted but more structural: the reform introduced by Article 84 of the 2025 Finance Act modifies the capital gain calculation on disposal for real-expense LMNP landlords, adding previously deducted depreciation back into the taxable base.

This article is for general information purposes only. It does not constitute personalised tax advice. Any decision regarding your LMNP situation should be taken after review of your documents, applicable regime, and the legislation in force at the date of your transaction. Rates, thresholds, and taper percentages cited are those known at 25 May 2026 and are subject to change. Please consult a chartered accountant or tax adviser for guidance specific to your circumstances.