Real-estate portfolio: income tax, furnished lettings and the IFI wealth tax

Quick answer. A real-estate portfolio combines several tax regimes: unfurnished lettings fall under property income (micro-foncier 30% up to 15,000 euros or the actual-expense regime with a deficit deductible up to 10,700 euros), furnished lettings under BIC as an LMNP, and above 1,300,000 euros of net real-estate assets you enter the scope of the IFI.

Owning several rental properties is not simply about collecting rent: each type of property follows a distinct tax regime, and a single landlord can simultaneously fall under property income, BIC and the real-estate wealth tax. A portfolio therefore creates a complexity that owning a single property rarely reveals. The point is not to apply one regime, but to weigh several, property by property.

This article maps out the tax landscape of a landlord with a diversified rental base: how rents are taxed depending on the property, the choice between flat-rate and actual-expense regimes, the LMNP status, the holding structure, and entry into the scope of the IFI. A useful clarification: the former solidarity tax on wealth, the ISF, was abolished in 2018 and replaced by the IFI, which now applies only to real-estate assets.

The first mistake is to think of "real estate" as a single block. The tax authority first distinguishes the nature of the letting: unfurnished or furnished. This distinction governs everything else.

Unfurnished letting generates property income (revenus fonciers), taxed under the progressive income-tax scale. Furnished letting generates industrial and commercial profits (BIC), a different tax world that notably allows the property to be depreciated.

In both cases, social levies are added to income tax. On investment income, their rate has risen to 18.6% since 1 January 2026, up from 17.2%. This increase, often forgotten in projections, mechanically raises the pressure on net rental income.

Our reading#

A mixed portfolio combining unfurnished and furnished properties should be assessed regime by regime, not through a single choice. Nothing requires treating every property the same way, except for the constraints specific to each regime that we set out below.

For unfurnished letting, two regimes coexist. The micro-foncier applies a flat 30% deduction on rents, up to 15,000 euros of gross rent per year. The actual-expense regime allows real expenses to be deducted and, above all, a property deficit to be recorded.

The property deficit is deductible from overall income up to 10,700 euros per year. A key technical point: loan interest never offsets overall income, only property income. Any excess deficit is carried forward to later years.

Opting for the actual-expense regime commits the landlord for three years. It is therefore not a choice that can be reversed each year.

Trade-off#

The micro-foncier suits a lightly charged property, without works or heavy borrowing, whose real expenses are below 30% of the rent. As soon as there are significant works, high loan interest or substantial co-ownership charges, the actual-expense regime is almost always preferable, because it opens up expense deduction and the property deficit.

Furnished letting falls under BIC. The non-professional landlord operates under the LMNP status (loueur en meublé non professionnel). Here again, two regimes compete. We detail these trade-offs in our articles on the LMNP in 2026 and the LMNP versus LMP distinction.

The micro-BIC applies a 50% deduction for standard long-term furnished letting, up to 77,700 euros of receipts. The actual-expense regime allows expenses to be deducted and, a major advantage, the property to be depreciated, which often wipes out most of the current tax on rents.

A major point of vigilance has recently changed the picture. Since 15 February 2025, under the 2025 Finance Act, depreciation deducted under the LMNP actual-expense regime is added back into the capital-gain calculation on resale. In practice, the benefit obtained during ownership is partly recaptured at the time of sale, because the taxable gain is increased.

The underestimated risk#

Many LMNP landlords on the actual-expense regime built their strategy on "free" depreciation. Adding depreciation back into the capital gain since 15 February 2025 changes this balance: the tax saving during ownership is partly recaptured on exit. This does not disqualify the actual-expense regime, but it requires reasoning over the whole cycle, ownership and resale included.

The real-estate wealth tax, the IFI, replaced the ISF in 2018. It now applies only to real-estate assets, excluding financial assets. You are liable when your net real-estate assets exceed 1,300,000 euros on 1 January.

A technical subtlety: while the liability threshold is set at 1,300,000 euros, the scale itself starts at 800,000 euros once that threshold is crossed. The first taxed bracket therefore runs from 800,000 to 1,300,000 euros.

A relief reduces the threshold effect for assets between 1,300,000 and 1,400,000 euros: it amounts to 17,500 euros, reduced by 1.25% of the net taxable value. The main home also benefits from a 30% allowance. The return is filed on form 2042-IFI, attached to the income-tax return.

What the tax authority looks at#

The IFI is assessed on 1 January on all net real-estate assets, after deductible debts. A portfolio that appreciates with each acquisition may cross the threshold without the landlord realising it, especially if the properties have gained value since purchase. The current valuation of the properties, not their acquisition price, is the central point of attention.

The holding structure deeply changes the tax treatment. An SCI can fall under income tax (fiscal transparency) or elect for corporate income tax. This choice is structural and largely irreversible in practice, as explained in our comparison of an income-tax versus corporate-tax SCI.

The income-tax SCI is transparent: property income flows up to the partners, with no depreciation possible. On resale, the private capital-gains regime applies, with its allowances for holding period: exemption from income tax after 22 years and from social levies after 30 years.

The corporate-tax SCI, by contrast, allows the building to be depreciated, which reduces the current tax on rents. But on resale, the gain is professional: it is calculated on the difference between the sale price and the net book value, with no allowance for holding period, and it is taxed under corporate income tax.

On the 2026 corporate-tax rate: the standard rate is 25%, and a reduced rate of 15% applies to the fraction of profit up to 42,500 euros, subject to SME conditions and to the capital being held at least 75% by individuals. This condition is rarely met for an asset-holding SCI owned by a holding company.

Trade-off#

The corporate-tax SCI is not automatically the "winner" despite depreciation. It suits a logic of capitalising rents without short-term resale. The income-tax SCI is better suited to long-term ownership followed by resale, thanks to the holding-period allowances, and to transmission. The right choice depends on the horizon: hold to let and capitalise, or hold to resell. There is no universal winner. Holding professional premises through an SCI follows the same logic, covered in our article on holding your business premises in an SCI.

Here is a method to regain control of a portfolio that has become complex:

1. List the properties by nature: unfurnished letting, long-term furnished letting, classified or unclassified tourist furnished letting.
2. Assign the right regime to each property: flat-rate or actual-expense for property income, micro-BIC or actual-expense for furnished, by quantifying real expenses.
3. Test the property deficit on heavily charged properties or those under works, isolating the loan interest that offsets property income only.
4. Check IFI liability by valuing the net assets on 1 January, including the main home after the 30% allowance.
5. Question the holding structure in light of the horizon: keep and capitalise, or resell over time.
6. Anticipate the exit from the outset: for the LMNP actual-expense regime, factor in the add-back of depreciation into the capital gain.

The levers and pitfalls to keep in mind:

• The actual-expense regime is only worthwhile if real expenses exceed the corresponding flat deduction.
• Opting for the actual-expense property regime commits you for three years: not to be triggered for a single isolated year of works.
• Loan interest does not create a deficit deductible from overall income.
• LMNP depreciation reduces tax during ownership but increases the capital gain on resale since February 2025.
• The IFI is triggered on the current valuation of the assets, not on the purchase price.
• Unclassified tourist furnished letting lost its favourable regime with the Le Meur law.

Tourist furnished letting and the Le Meur law#

Not all tourist furnished lettings are now equal for tax purposes. The Le Meur law of 19 November 2024 tightened the regime for unclassified tourist furnished letting: the micro-BIC deduction was brought down to 30% and the ceiling lowered to 15,000 euros, against 50% and 77,700 euros for classified tourist furnished letting. Classification of the property thus becomes a tax parameter in its own right for the landlords concerned.

Ownership through an SCI or a holding company#

Placing properties in a corporate-tax SCI owned by a holding company can serve a capitalisation logic, but closes off access to the reduced 15% corporate-tax rate, whose condition of ownership by individuals is then no longer met. This is a fundamental trade-off, to be examined in light of the overall patrimonial objective and of our guide on a holding company versus an SCI, not a structure to be reproduced mechanically. The choice between a family SARL and an SCI or the use of a property SAS stem from the same structuring reflection.

The main home and the IFI#

The main home is included in the IFI base, but after a 30% allowance on its value. For a landlord whose assets rest substantially on the main home, this allowance can tip them above or below the 1,300,000-euro threshold. It is a point to recalculate each year on 1 January.

A common case#

In files of multi-property landlords, one pattern recurs often: an owner holds several flats, some let unfurnished, others furnished, without ever having weighed flat-rate against actual-expense property by property. They declare everything under the flat-rate regime out of habit, when two of their properties under works would have generated a significant property deficit under the actual-expense regime. Another recurring profile: the landlord whose assets have appreciated over the years and who is unaware that they are now liable for the IFI, having failed to revalue their properties on 1 January. In both cases, the obstacle is not the complexity of the rule, but the absence of a regime-by-regime framing.