LMNP vs LMP in France 2026: Tax, Social Charges, and Wealth Planning Compared

The distinction between LMNP (Loueur en Meuble Non Professionnel — non-professional furnished rental) and LMP (Loueur en Meuble Professionnel — professional furnished rental) is one of the most consequential classifications in French real estate taxation. It determines how deficits are treated, how capital gains are taxed on disposal, whether social contributions are due, whether wealth tax applies to your property portfolio, and what transmission mechanisms are available.

Yet many landlords are unaware of which regime they actually fall under — or discover at the point of a disposal that an involuntary switch to LMP has fundamentally altered their capital gain calculation. The 2025 Finance Act has changed the balance further. This article provides the complete 2026 comparison: definitions, switching mechanisms, fiscal and social impacts, practical scenarios, and the strategic considerations that matter for furnished rental property owners in France.

LMNP — Non-Professional Furnished Rental#

A landlord is classified as LMNP when they rent furnished residential accommodation but do not simultaneously meet both conditions required for professional status. In practice, two situations lead to LMNP classification:

• Gross furnished rental receipts (rent including charges, VAT where applicable) are below 23,000 euros per year, regardless of household composition; or
• Receipts exceed 23,000 euros but remain below the household's total professional income (employment income, BNC, other BIC activities, retirement pensions).

LMNP falls under the BIC (Benefices Industriels et Commerciaux — industrial and commercial profits) category, but in the non-professional sub-category. Deficits may be carried forward for ten years but only against income of the same BIC non-professional category — not against global income.

LMP — Professional Furnished Rental#

Since the 2019 Finance Act (codified at CGI Article 155 IV), LMP classification is automatic whenever two conditions are met simultaneously in the same tax year:

1. Furnished rental receipts for the household exceed 23,000 euros per annum;
2. Those same receipts exceed the household's total professional income (net employment income, BNC, other BIC, pensions and annuities).

There is no election or option: if both thresholds are crossed, the landlord is LMP by operation of law. If either condition ceases to be met in a subsequent year, the landlord reverts to LMNP from that year.

Our view. The comparative condition — receipts exceeding professional income — is frequently underestimated. A senior executive earning 90,000 euros of employment income and receiving 60,000 euros in furnished rents remains LMNP. A retiree receiving a 24,000-euro pension with the same 60,000 euros of rental receipts becomes LMP. The regime is therefore not purely a question of rental volume but of an annual comparison between two income streams.

Automatic Switch to LMP#

Once both cumulative conditions are satisfied in the same tax year, the landlord switches to LMP without any declaration or election. The consequence is immediate: the year's result is treated as professional BIC income, deficits can be offset against global income, and SSI social contributions become due.

In practice, this switch most commonly occurs when:

• one or more additional properties are acquired, pushing receipts above 23,000 euros;
• professional income falls (retirement, termination of employment, cessation of independent activity); or
• a combination of both occurs.

Reverting from LMP to LMNP#

If, in a subsequent year, either condition ceases to be met — for example receipts fall back below 23,000 euros, or professional income recovers above the rental receipts — the landlord reverts to LMNP from that year. There is no minimum holding period in LMP status.

The underestimated risk. Landlords who have been LMP for several years and have carried forward deficits offset against global income may lose that status suddenly — for example by resuming full-time employment or receiving an exceptional bonus. Deficits not yet utilised remain locked in the professional BIC category and can no longer be deducted from global income. Annual projection is essential.

LMNP: Non-Professional BIC Rules#

LMNP results are taxed under BIC, but the non-professional character restricts the value of deficits. An LMNP deficit:

• may be carried forward for ten years;
• can only be offset against LMNP income of the same non-professional category — not against global income or other BIC categories.

Before the 2025 Finance Act, capital gains on disposal of an LMNP property were taxed under the private individuals capital gains regime (CGI Article 150 U), with progressive allowances for length of ownership leading to full exemption after 22 years for income tax (30 years for social levies). The acquisition cost basis was the original purchase price, and accumulated depreciation deductions were not added back to the taxable gain.

LMP: Professional BIC Rules#

LMP results fall under professional BIC. Deficits can be offset against global income for the year without cap (unless the IS option applies through a company structure), and then carried forward against global income for six subsequent years. This imputation capacity is particularly useful during investment phases or major works.

Capital gains on disposal of an LMP property fall under the professional capital gains regime (CGI Articles 39 duodecies et seq.), with a distinction between short-term gains (property held less than two years, or depreciation recognised for less than two years) taxed at the marginal rate plus social levies, and long-term gains taxed at 12.8% plus 17.2% social levies.

The 2025 Finance Act materially changed the capital gain calculation on disposal of LMNP properties. From 1 January 2025, depreciation deductions taken during the holding period must be added back to the taxable gain, resulting in a higher taxable base than under the previous regime.

Before this reform, an LMNP landlord selling a flat acquired for 200,000 euros, having deducted 80,000 euros of depreciation, calculated the capital gain on the original 200,000-euro acquisition cost without adjusting for accumulated depreciation. Under the new rules, the effective acquisition cost basis is reduced by the depreciation claimed, increasing the taxable gain accordingly.

This reform eliminates one of the defining historical advantages of LMNP: cumulating depreciation deductions during the rental period while benefiting from a capital gain calculation that ignored those deductions on exit. LMNP remains advantageous (no social contributions, deficits carried forward in NP BIC category), but the disposal arbitrage has been recalibrated. For new acquisitions in 2025 and 2026, the two regimes now share a similar depreciation add-back mechanism, which places greater weight on the remaining differentiators — social charges, IFI, and Dutreil.

This is one of the most powerful advantages of LMP for small and medium-scale portfolios.

Article 151 septies of the CGI provides for full exemption of professional capital gains (both short-term and long-term) when the activity has been carried on for at least five years and receipts over the two most recent financial years are below the following thresholds (to be verified for any subsequent upward revision):

In practice. A retired LMP landlord who has rented six furnished flats for ten years with 80,000 euros in annual receipts may sell one — even with a substantial gain — and face zero capital gains tax. The saving compared with an LMNP landlord who must now add back cumulative depreciation can be very significant. The condition of five years in LMP status must nonetheless be met.

LMNP: No Social Contributions as a Rule#

LMNP does not generate SSI social contributions on rental income, except in a specific case: since the 2021 Social Security Finance Act, classified tourist furnished rentals with receipts above 23,000 euros may in certain configurations be subject to social levies. Outside this case, LMNP income bears social levies at 17.2% (CSG, CRDS) but not SSI contributions.

LMP: Substantial SSI Contributions#

A LMP landlord who is not otherwise an employee is affiliated to the SSI regime (Securite Sociale des Independants). Contributions typically represent 35 to 45% of net profit depending on income level and household configuration. They are fiscally deductible from BIC income, but represent a meaningful cash flow burden.

In return, these contributions confer entitlements: health insurance, basic and supplementary pension, disability and death cover. For a landlord without other social cover, this may in certain cases be a factor worth weighing in the overall analysis.

LMNP: Assets Taxable for IFI#

Properties held under LMNP form part of the taxable real estate wealth for IFI purposes, like any ordinary property. No specific exemption applies to non-professional furnished rentals.

LMP: Potential Exemption Under CGI Article 975#

Article 975 of the CGI provides an IFI exemption for assets used in a principal professional activity. For LMP landlords, the conditions are:

1. The furnished rental activity is carried on as the principal occupation (i.e. constitutes the main occupation of the taxpayer);
2. Rental receipts exceed 50% of all professional income of the household.

This exemption is particularly powerful for retirees who have built a significant furnished rental portfolio and whose rents are their primary income source. For a furnished rental portfolio of substantial value, the annual IFI saving can be considerable.

LMNP: Standard Transfer Rules#

LMNP properties are transferred under the general regime for gratuitous transfers (gifts, inheritance). Standard transfer duties apply without any reduction specific to furnished rental activity.

LMP: Potential Access to the Dutreil Mechanism#

The Dutreil pact (CGI Article 787 B) allows, under conditions, a 75% allowance on the value of a business transferred by way of gift or inheritance. For LMP landlords, the main conditions are:

• The activity has been carried on professionally for at least two years;
• A collective conservation undertaking is entered into (minimum two years);
• Heirs or beneficiaries take individual conservation undertakings (four additional years);
• At least one of them manages or operates the activity.

The application of Dutreil to an LMP activity remains technically complex and depends on administrative guidance and case law. It requires a specific estate planning audit, ideally initiated several years before any anticipated transfer.

Scenario 1: Paris executive couple, 3 flats, 60,000 euros in receipts#

Marie and Paul are both employees earning a combined 120,000 euros of employment income. They rent out three furnished flats in Paris for 60,000 euros in annual receipts.

Applicable regime: LMNP. Receipts (60,000 euros) exceed 23,000 euros but are below household professional income (120,000 euros). The first condition is met; the second is not. They remain LMNP.

Post-LFI 2025 consequence: when they dispose of a flat, accumulated depreciation must now be added back to the taxable gain. A forward capital gains calculation is essential before any disposal.

Scenario 2: Retired landlord, 6 flats, 120,000 euros in receipts#

Bernard is retired and receives 18,000 euros of annual pension. He rents six furnished flats generating 120,000 euros in receipts.

Applicable regime: LMP. Both conditions are met: receipts exceed 23,000 euros AND exceed professional income (18,000 euros pension). Bernard is LMP by operation of law.

Key points: SSI contributions on net profits, but potential IFI exemption on the entire furnished portfolio, and potential capital gains exemption under Article 151 septies if receipts on a partial disposal fall below 90,000 euros.

Scenario 3: Progressive transition from LMNP to LMP#

Sophie started with two furnished flats eight years ago (receipts: 28,000 euros, salary: 55,000 euros). She was LMNP. In 2024, she left employment to manage her property portfolio full-time and acquired three additional properties. Her receipts reached 85,000 euros in 2025; her professional income from a small independent activity amounted to only 6,000 euros.

Switch to LMP in 2025. Both conditions are now met. Sophie becomes LMP. She must:

• confirm SSI affiliation and regularise contributions due;
• identify her prior LMNP deficits carried forward (they remain applicable only against NP BIC income, not global income);
• plan any potential disposals taking into account that the Article 151 septies exemption becomes available once she has been in LMP status for five years (here, from 2030).

The LMNP / LMP distinction is not a choice: it flows from the landlord's objective situation in each tax year. What can be managed, however, is anticipating the switch and controlling its effects — which is a genuine lever in property wealth management.

Key points to monitor in 2026:

• Run an annual projection comparing rental receipts against household professional income to identify proximity to the LMP threshold.
• Before any LMNP disposal, calculate the net taxable gain after the LFI 2025 depreciation add-back: the difference from the pre-reform calculation can be material.
• If you have been LMP for more than five years with receipts close to or below 90,000 euros, the Article 151 septies exemption is a significant advantage worth protecting.
• Where a substantial furnished rental portfolio exists and IFI is a concern, assess the Article 975 exemption: the conditions are precise but the potential saving can be considerable.
• Estate planning (Dutreil, lifetime gift) should be reviewed well in advance — not on the eve of a succession.

What to watch. The LFI 2025 LMNP reform does not apply retroactively to disposals completed before 1 January 2025, but it applies to all subsequent disposals regardless of when the rental activity started. Accumulated depreciation from the entire holding period is added back. For landlords who acquired properties ten or more years ago, the amount added back may represent tens of thousands of euros of additional taxable gain.

Hayot Expertise supports furnished rental landlords — from annual BIC filings through to estate planning — with an integrated approach covering income tax, social contributions, IFI, and transmission. If your portfolio is growing or you are approaching a switching threshold, a conversation with a specialist accountant will let you plan ahead rather than react.

Updated 15 May 2026. This article is for general information purposes only; it does not replace a personalised analysis of your situation. Thresholds and tax conditions should be verified against official sources or with the firm before any decision.