LMNP France 2026: New LFI 2025 Rules, Micro-BIC Thresholds and Tax Strategies for Furnished Rental Landlords

The LMNP regime — Loueur en Meublé Non Professionnel, or non-professional furnished rental landlord status — has long been one of the most tax-efficient structures for private real estate investment in France. Landlords could deduct building and furniture depreciation against rental income each year, while the capital gains tax on disposal was calculated under the favourable private gains regime without reinstating those depreciation deductions. That double advantage has been partially dismantled by France's 2025 Finance Act (loi n° 2024-1322 of 14 December 2024).

At Hayot Expertise, we advise property investors across Paris and the greater Île-de-France region. This article gives you our professional reading of the post-reform landscape, the thresholds that matter in 2026, and the decision frameworks you need to position your investment correctly.

The LMNP qualification applies to any individual who rents out one or more furnished dwellings meeting the minimum equipment requirements under French law, without crossing into the professional LMP category. Under Article 155 IV of the General Tax Code (CGI), LMNP status is maintained when:

• Annual furnished rental receipts remain below €23,000 (all properties combined) OR below the landlord's total professional income declared on the household tax return; and
• The landlord is not registered with the commercial register (RCS) as a professional furnished letting operator.

Breaching either condition automatically triggers LMP (professional) status — a shift that carries significant social contribution obligations and different tax treatment. In practice, this threshold catches many investors by surprise, particularly those who have expanded a portfolio without modelling cumulative rental income against household professional income.

The Previous Regime: A Double Tax Advantage#

Until 14 February 2025, the LMNP real-accounting regime offered two advantages that rarely coexist in a single investment vehicle:

1. During the holding period: building depreciation (typically over 40 years for structural components, 7–15 years for furniture and fittings) was fully deductible against BIC rental income, often neutralising the annual tax charge entirely;
2. On disposal: the capital gain was calculated under the private individual gains rules (CGI art. 150 U), without reinstating the depreciation previously deducted. The tax cost basis was not reduced by accumulated depreciation.

In short: landlords benefited from depreciation throughout the holding period, then disposed of the asset as if no depreciation had occurred. This combination was the core financial attraction of the LMNP real regime.

What LFI 2025 Changes from 15 February 2025#

For disposals taking place from 15 February 2025 onwards, the depreciation amounts effectively deducted during the LMNP period must be added back into the capital gains calculation. The acquisition price used to compute the gain is reduced by cumulative depreciation claimed. The taxable gain is therefore mechanically higher.

The resulting gain falls under the professional gains regime (CGI art. 39 duodecies), distinguishing short-term gains (asset held less than 2 years) and long-term gains. Duration-based allowances still apply, but the tax base is now eroded by the depreciation history of the property.

Worked example: a flat purchased for €300,000 on which €60,000 of depreciation has been deducted over 10 years, sold for €380,000. Under the former regime, the private gain was €80,000 (€380,000 minus €300,000). Under the reformed rules, the professional gain is €140,000 (€380,000 minus €240,000). On a high-value Parisian asset held over many years, the impact is very significant.

Our view: The reform does not eliminate the deductibility of depreciation during the holding period. The advantage is deferred rather than abolished. However, the total tax cost over the investment lifecycle must now be modelled in full, incorporating the exit tax position. Any investor contemplating a disposal in the near to medium term should obtain a specific tax review before proceeding.

The 2025 Finance Act also amended Article 50-0 of the CGI for non-classified furnished holiday lettings — properties rented on platforms such as Airbnb without an official star classification from an Atout France-accredited body:

• The micro-BIC flat-rate allowance is cut from 50% to 30%;
• The micro-BIC turnover cap is reduced from €77,700 to €15,000.

Any non-classified holiday let landlord generating more than €15,000 per year is now automatically required to use the real accounting regime. Below €15,000, the 30% allowance is considerably less generous than before. The policy objective is to reduce short-stay tourist lettings in cities with housing pressure and redirect stock towards long-term residential leasing.

When the Real Regime Clearly Outperforms#

The real simplified regime is almost always the stronger choice when:

• The property is mortgage-financed (interest is deductible);
• Renovation works or furniture have been carried out;
• Land tax, service charges, management fees, and insurance are material;
• Structural and furniture depreciation exceeds half of gross receipts.

Micro-BIC retains relevance for a landlord who has repaid the mortgage, carries minimal charges, and whose marginal income tax rate makes the flat-rate allowance competitive.

Unlike LMP status, LMNP income does not trigger self-employed social security contributions. LMNP landlords pay only:

• CSG/CRDS at 17.2% on the net taxable income;
• Income tax at the progressive scale.

This is a meaningful structural advantage compared to LMP, where income is subject to self-employed contributions at roughly 35–45%. An unintentional LMP reclassification — discovered in a tax audit covering multiple prior years — can generate very substantial social contribution adjustments.

Situation: 45 m² flat in Paris 11th arrondissement, purchased for €350,000 (including €50,000 of furniture and fittings), rented furnished at €1,500/month (€18,000 annual receipts), mortgage outstanding (interest: €6,000/year), land tax: €1,200, service charges: €1,800, insurance: €300.

Micro-BIC: 50% allowance, taxable base €9,000.

Real regime:

• Building depreciation: €300,000 / 40 years = €7,500/year
• Furniture depreciation: €50,000 / 10 years = €5,000/year
• Mortgage interest: €6,000
• Land tax: €1,200
• Service charges: €1,800
• Insurance: €300
• Total deductions: €21,800
• BIC result: €18,000 – €21,800 = –€3,800 (carryforward loss, 10 years against LMNP income)

The real regime eliminates the tax charge entirely and generates a carryforward loss. The annual saving versus micro-BIC is significant for a landlord in a high income tax bracket. Our recommendation for this profile is unambiguous: the real regime.

Situation: flat in Cannes purchased for €200,000, officially classified as a furnished tourist let (2 stars), €30,000 annual revenue, €12,000 of real costs (maintenance, platform fees, furniture, insurance), mortgage fully repaid.

Micro-BIC classified holiday let: 71% allowance, taxable base €8,700. Attractive where the official classification is current.

Real regime:

• Building depreciation: €180,000 / 40 years = €4,500/year
• Furniture depreciation: €20,000 / 7 years ≈ €2,857/year
• Actual costs: €12,000
• Total: €19,357
• BIC result: €30,000 – €19,357 = €10,643 taxable

Here, the classified micro-BIC (€8,700 taxable base) remains slightly more favourable. The balance shifts if significant works are planned. Note: were this property not classified, the €15,000 cap would force the real regime regardless.

Hold Long and Plan for Transmission#

The depreciation clawback only materialises on an inter vivos sale. Where a property passes to heirs through succession or gift, the legatees receive the asset at its market value on the date of transfer. Accumulated depreciation is extinguished — not reinstated. For investors with a long-term or intergenerational horizon, the regime remains attractive; the strategy shifts towards holding rather than selling.

Transition to LMP if Receipts Grow#

When furnished rental receipts cross both the €23,000 threshold and the household professional income threshold, LMP status applies automatically. LMP deficits are then deductible against overall income, and a full capital gains exemption (CGI art. 151 septies) becomes available after 5 years of qualifying activity. For high-volume landlords, deliberately structuring towards LMP can be worth modelling.

Restructure into a Société Civile Immobilière Taxed at Corporate Rate#

A property-holding SCI electing corporate tax (IS) offers depreciation deductions, a 15% IS rate on up to €42,500 of profit and 25% above, but no duration-based capital gains allowances on disposal. This structure suits investors who intend to retain profits within the entity without a near-term sale plan. For a full comparison, see our analysis of SCI à l'IS or à l'IR: wealth planning arbitrage.

The underrated risk: many LMNP real-regime landlords have never properly maintained an annual depreciation schedule in their tax return. Under French tax doctrine, depreciation not actually claimed is still deemed to have been deducted for the purpose of the capital gains calculation on disposal. Landlords who have been imprecise in their annual accounting may face a higher than anticipated tax bill at exit — with no corrective remedy available.

Losses generated under the LMNP real regime are carryforward-eligible for 10 years — but only against future profits from other non-professional furnished rental activities. They are not deductible against:

• The household's overall taxable income;
• Unfurnished rental income (revenus fonciers).

An investor holding both a non-furnished flat and a furnished flat cannot use the LMNP loss to offset rental income from the former. The two tax compartments are structurally separate and cannot be combined.

Failing to record depreciation annually: LMNP real-regime depreciation must be computed by asset component and recorded each year in the 2031 tax return. It is not automatic. Unclaimed depreciation represents foregone tax relief — and the administration may reinstate it on disposal regardless.

Misclassifying the accommodation: listing on Airbnb does not make a property a classified furnished tourist let. Official classification requires an inspection by an Atout France-accredited body. Misclassification leads to incorrect micro-BIC treatment and potential tax reassessment.

Ignoring the LMP threshold: incremental rent increases and portfolio expansion can tip a landlord into LMP status without warning. A retroactive social contribution adjustment across multiple prior years can be very damaging.

Not planning the exit: with the LFI 2025 depreciation clawback, disposing of a LMNP property without prior tax modelling is no longer prudent. A pre-sale tax review is now essential for any disposal project.

Hayot Expertise advises LMNP landlords in Paris and the Île-de-France region with:

• Pre- and post-LFI 2025 situation audits, particularly for investors considering disposal or restructuring;
• Setup or remediation of real-regime accounting, including component depreciation schedules and form 2031 filings;
• Structural arbitrage between LMNP, LMP, and SCI holding vehicles;
• Annual tax optimisation and management of carryforward losses against LMNP income.

Every situation is different. The right regime depends on the household's tax profile, investment horizon, disposal or estate planning intentions, and the composition of the property portfolio. Our analysis systematically incorporates a post-reform capital gains simulation to give you a complete view of your furnished rental investment.

Written by Samuel Hayot, Managing Partner, Hayot Expertise, Paris. Updated 15 May 2026. Tax and social security rules are subject to change; a personalised analysis requires a review of your documents and current legislation.

Sources: Légifrance (CGI art. 155 IV, 50-0, 39 duodecies), Loi n° 2024-1322 of 14 December 2024, BOFiP BOI-BIC-CHAMP-40 and BOI-BIC-BASE-60-20, URSSAF, impots.gouv.fr.