LMNP taxation in France 2026: micro-BIC, réel regime, depreciation and capital gains

Furnished letting in France falls under the business income category known as bénéfices industriels et commerciaux (BIC), not ordinary property income (revenus fonciers). That single qualification drives everything else: the thresholds, the forms, the ability to depreciate the property and, since 2025, the way the capital gain is computed on sale. Understanding LMNP (loueur en meublé non professionnel — non-professional furnished landlord) taxation means choosing between two regimes, then planning the exit.

LMNP remains one of the most effective frameworks in French residential investment, but it can no longer be run on autopilot. The 2025 Finance Act changed the taxation of disposals, and the so-called Le Meur law tightened the micro-BIC thresholds. Here is an up-to-date guide for choosing with full visibility.

Direct answer. Under LMNP, you are taxed either under the micro-BIC (a flat-rate allowance; threshold of €83,600 for standard furnished letting and classified tourist accommodation, €15,000 and a 30% allowance for unclassified tourist accommodation) or under the régime réel (deduction of actual expenses and depreciation). Since the 2025 Finance Act, depreciation claimed under the réel regime reduces the acquisition price used to compute the capital gain on resale.

The micro-BIC applies a flat-rate allowance to rental receipts, with no deduction of actual expenses or depreciation. It is simple, but usually less favourable as soon as the property is financed by a loan or carries significant charges.

The régime réel allows the deduction of loan interest, co-ownership charges, insurance, property tax (taxe foncière), management fees and, above all, depreciation of the property and furniture. It requires full accrual accounting and the filing of a tax package (form 2031 and 2033 annexes).

Firm's view: in LMNP the right question is not which regime is simpler, but which one produces the best net result after tax over your holding period — exit included.

The Le Meur law changed the ceilings and allowances applicable to furnished letting. Three situations must be distinguished.

1. Long-term furnished letting (where the property is the tenant's main home): micro-BIC threshold of €83,600, 50% allowance.
2. Classified tourist accommodation (meublé de tourisme classé): threshold of €83,600, 50% allowance (the former 71% allowance with a €188,700 ceiling has been abolished).
3. Unclassified tourist accommodation (meublé de tourisme non classé): threshold of €15,000, 30% allowance.

Above these thresholds, the régime réel applies automatically. Below them, you may elect for the réel if deducting actual charges and depreciation is more advantageous. The election must be notified to the tax authority and is binding for a minimum period.

Depreciation is the main lever of the régime réel. A property is not depreciated as a single block: its value is split between the land (not depreciable), the structure, the roof, technical installations and furniture, each depreciated over its own useful life. This component-by-component split must be documented from the moment you enter the réel.

Depreciation reduces taxable profit, often neutralising tax on the rent for several years. It cannot, however, create a loss that carries forward beyond the rental income: the excess depreciation is reserved and carried to later years.

For practical implementation and guidance on choosing a firm able to maintain that depreciation schedule over time, see how to choose an accountant (expert-comptable) specialising in LMNP réel.

This is the core advantage of the réel over the micro-BIC's flat-rate allowance. Under the régime réel, you deduct expenses actually incurred in the furnished letting activity, provided they are properly evidenced and incurred in the interest of the business.

The main deductible items are:

• loan interest and arrangement fees on financing;
• taxe foncière (property tax) and cotisation foncière des entreprises (CFE — the business property levy);
• non-recoverable co-ownership charges;
• insurance premiums (landlord non-occupier, rent guarantee);
• letting and property management fees;
• accountant fees and file-maintenance costs;
• routine maintenance and repair expenditure;
• depreciation of the property and furniture.

The distinction between an immediately deductible expense and a capital item that must be capitalised and then depreciated is a common technical issue. A major refurbishment or equipment replacement must be capitalised, while routine maintenance is deducted in the year. Misclassifying items distorts the result and can be challenged on audit.

Under the micro-BIC, you simply enter your rental receipts on the supplementary tax return 2042-C PRO, in the section for non-professional furnished letting income. The flat-rate allowance is applied automatically by the tax authority; no accounting records are required.

Under the régime réel, you file a standalone tax package with the service des impôts des entreprises (SIE — the business tax office): the profit and loss return 2031 and its 2033 annexes (balance sheet, income statement, schedule of assets and depreciation). The net result is then carried across to your 2042-C PRO. Compliance with filing deadlines is a condition for the deductibility of charges and depreciation. A late filing can trigger penalties and — more seriously — the loss of the réel-regime benefit for the year concerned.

This is the major development. The 2025 Finance Act (loi n° 2025-127 du 14 février 2025, article 84, amending article 150 VB of the CGI) provides that depreciation deducted under the régime réel reduces the acquisition price used to compute the property capital gain. The gross gain therefore increases by the amount of cumulative depreciation deducted.

The rule applies to disposals completed on or after 15 February 2025 and covers depreciation deducted since the activity began, including amounts taken before 2025. The micro-BIC is unaffected, since it claims no depreciation.

Exceptions exist: certain managed-residence properties (résidences services — student, senior and care-home residences) are excluded from the add-back, as is depreciation corresponding to works already taken into account in the gain calculation. The gain continues to be taxed under the private capital gains regime: 19% income tax, 17.2% social levies, with holding-period allowances (full income-tax exemption beyond 22 years of ownership, full social-levy exemption beyond 30 years).

For the full detail of this reform, read the real LMNP 2026 reform.

You buy a furnished flat for €250,000 in 2020, let under the régime réel, and deduct €40,000 of cumulative depreciation by 2026. You sell for €320,000.

Before the reform, the gross gain would have been €70,000 (€320,000 minus €250,000). Since the 2025 Finance Act, the acquisition price becomes €210,000 (€250,000 minus €40,000), raising the gross gain to €110,000. Before any holding-period allowances, the additional taxable base is €40,000 — exactly the depreciation added back. The annual benefit of depreciation remains real, but it must now be weighed against exit taxation.

You become a loueur en meublé professionnel (LMP — professional furnished landlord) if two cumulative conditions are met: your annual furnished rental receipts exceed €23,000 and those receipts exceed the other professional income of your tax household. LMP status changes the treatment of losses, capital gains and liability to social contributions.

For a detailed comparison, see LMNP vs LMP: which tax regime. And if you are uncertain about the ownership structure, LMNP or SCI: which regime for furnished letting addresses a point that is frequently misunderstood.

Yes on both counts. Any furnished letting activity must be declared within 15 days via the INPI single-window portal (guichet unique de l'INPI), which generates a SIRET number. The details are set out in LMNP and SIRET: mandatory or not.

The furnished landlord is also in principle liable for the cotisation foncière des entreprises (CFE — business property levy), save for specific exemptions. See CFE and LMNP for the exemption cases and the minimum assessment base.

• Choosing the micro-BIC out of habit, without any comparative simulation against the régime réel.
• Depreciating without a component-by-component split or a documented methodology.
• Overlooking the future impact of cumulative depreciation on the capital gain following the 2025 reform.
• Failing to declare the start of activity, obtain a SIRET number, or register for CFE.
• Modelling entry taxation without factoring in exit taxation from the outset.

The right choice is built on figures, not routine. Compare the net after-tax result over several years, assess your capacity to maintain proper réel-regime accounts, and integrate the exit scenario from day one. A poorly administered réel regime quickly becomes a source of frustration; a micro-BIC chosen by default can cost avoidable tax.

In the files we handle, the decisive differential rarely comes from the annual tax rate alone: it comes from the holding period, the level of debt financing and the quality of the depreciation documentation.

In 2026, LMNP taxation remains a powerful tool, but it must be steered across three timeframes: the taxation of rental income, accounting obligations and exit taxation. The capital gains reform has reinforced the importance of rigorous depreciation tracking and a whole-of-investment-life view.

Current as of 26 May 2026. This article is for information only and does not substitute for advice tailored to your situation. For any decision, consult a chartered accountant (expert-comptable) registered with the Ordre des experts-comptables.