The Long-Term Lease: Long-Term Real Estate Optimization

Updated March 2026 - Little known to the general public but popular with institutional investors and communities, the long lease is a powerful legal tool for securing a very long-term real estate investment without acquiring full ownership of the land. Whether you are a lessor or lessee, this specific contract offers unique tax and accounting levers. This guide deciphers the issues of long lease in 2026.

The long-term lease is a long-term rental contract, between 18 and 99 years. It relates to an immovable (land or building) and confers on the lessee (the leaseholder) a real real estate right, subject to mortgage.

The basic rules:

• ▸Duration: Minimum 18 years, maximum 99 years. A 17-year lease is not long-term.
• ▸The royalty (The canon): Unlike a traditional rent, the "long-term lease" is generally modest, because the value of the contract lies in the work and improvements that the lessee undertakes to carry out.
• ▸Maintenance: All repairs, including major repairs (roof, walls), are the responsibility of the lessee.

The major advantage for the lessee is to be able to exploit land or a building without mobilizing the capital necessary for its final purchase.

Levers in 2026:

• ▸Productive investment: Ideal for projects with a long return on investment (renewable energy, hotels, logistics warehouses).
• ▸Accounting treatment: The leaseholder depreciates not only the buildings he builds on the land, but also the cost of acquiring the lease itself (if he bought it back).
• ▸Property tax: It is the lessee who is liable for the property tax, but he controls the basis depending on his arrangements.

The lessor retains ownership of the land while discharging all maintenance and management for a century.

• ▸Recovery of improvements: At the end of the lease, the lessor recovers free of charge (unless otherwise stipulated) the land AND all constructions carried out by the lessee. It is a very effective intergenerational wealth transmission strategy.
• ▸Income taxation: Long-term leases are taxable in the category of property income for individuals, or industrial and commercial profits for companies.

👉 Need help structuring your real estate taxes?

The long lease is a serious act which requires notarial registration.

• ▸Registration fees: They are calculated on the cumulative amount of canons (royalties) over the entire duration of the lease.
• ▸Capital gains: In the event of transfer of the lease during the course of the lease, taxation follows the regime of real estate or professional capital gains depending on the status of the transferor.
• ▸VAT: The long lease may be subject to VAT (optionally or automatically depending on usage), which allows the lessee to recover VAT on major construction work.

In 2026, the long lease is the preferred contract for the deployment of renewable energies.

• ▸A farmer or a company rents his roof or degraded land to an energy company for 25 years.
• ▸The energy company installs the panels, maintains them and pays a fee or renovates the building free of charge in exchange for using the energy.
• ▸At the end of the lease, the installation returns to the owner of the land.

The main risk lies in the rigidity of the contract.

• ▸Difficult termination: You cannot terminate a long lease like a traditional commercial lease. Non-payment of the barrel or lack of major maintenance are the only real reasons.
• ▸End of lease: It is necessary to anticipate the last 5 years of the contract to prevent the lessee from letting the building deteriorate if he knows that he must return it without compensation.

The long lease is the ally of those who see far. It allows you to build, innovate and transmit while optimizing your immediate cash flow. However, its technicality requires joint support by a notary and an accountant.

👉 Discover our real estate expertise missions

📞 A complex lease project? We analyze for you the accounting and tax impact of your future long lease. Consult an expert in Paris

Official Sources:

• ▸Civil Code: Long-term leases (Articles L. 451-1 to L. 451-13)
• ▸Public Service: The long administrative lease
• ▸BOFIP: Tax regime for long-term leases