LMP vs LMNP 2026: depreciation and capital gains on sale#
The choice between LMP and LMNP has become more sensitive in 2026. Many furnished-rental investors relied on the LMNP real regime because depreciation could reduce taxable BIC income. But for sales completed from 15 February 2025, depreciation deducted under the LMNP real regime may have to be factored back into the capital-gain calculation. The decision now has to cover operation, cash flow and exit.
This guide complements our French articles on LMNP vs LMP, LMNP reform, LMNP taxation, LMNP tax return and LMNP or SCI. For support, see LMNP accounting in Paris, tax advisory, accounting services, real estate SCI LMNP and Pennylane.
Executive summary#
A furnished-rental activity is professional when the conditions of article 155 of the French Tax Code are met. The French tax authorities identify two cumulative conditions: annual furnished-rental income of the household exceeds EUR 23,000, and that income exceeds certain other professional income of the household. Otherwise, the activity is generally non-professional.
| Topic | LMNP | LMP |
|---|---|---|
| Qualification | Non-professional if LMP conditions are not met | Cumulative income and predominance tests |
| Income regime | BIC, micro-BIC or real regime | Professional BIC |
| Losses | Generally offset only against future LMNP income | Professional-loss rules under conditions |
| Sale | Individual capital-gain regime with depreciation adjustment since the 2025 reform | Professional capital-gain regime |
| Social exposure | Depends on the situation, especially short-term rentals | Usually stronger social contribution exposure |
| Decision logic | Wealth, cash flow and exit | Business activity and main income source |
Freshness note: updated on 3 May 2026. The exact outcome must be checked for the property, sale date, depreciation deducted and legal exceptions.
How LMP status is determined in 2026#
The status is not chosen freely. It results from income levels and comparison with the household's other professional income. Professional status is assessed at household level and applies to the household's furnished-rental activity as a whole.
Main conditions#
- annual furnished-rental income above EUR 23,000;
- furnished-rental income above relevant professional income of the household;
- global assessment when several furnished properties are operated.
The 2026 Finance Act added clarification for non-resident taxpayers: the comparison may include equivalent income subject to an equivalent income tax in the state of residence. This should be documented carefully.
LMNP depreciation: what changes on sale#
Under the real regime, depreciation remains a major accounting tool for BIC income. It reflects the economic depreciation of the building, excluding land, and furniture. The exit effect has changed.
The French tax authorities indicate that for sales completed from 15 February 2025, when the landlord is under the LMNP real BIC regime, depreciation deducted for taxable income purposes must be taken into account for the capital-gain calculation. In practice, the acquisition price used for the capital-gain basis is reduced by that depreciation, subject to legal exceptions.
Simplified example#
| Input | Amount |
|---|---|
| Purchase price excluding costs | EUR 300,000 |
| Depreciation deducted | EUR 45,000 |
| Sale price | EUR 380,000 |
| Indicative adjusted acquisition basis | EUR 255,000 |
| Indicative gross capital gain | EUR 125,000 |
This example is simplified. It does not include purchase costs, works, holding-period relief, land, exceptions or final tax. It simply shows why the exit must be modelled before sale.
Our accountant's view#
The reform does not make LMNP irrelevant. It changes the time horizon. During operation, depreciation may still be very useful for cash-flow planning and income smoothing. On sale, however, the apparent tax benefit must be compared with the exit tax. A short-term resale strategy is not the same as a 15- or 20-year wealth strategy.
The underestimated risk: weak depreciation records#
Depreciation must be supported: land/building split, components, furniture, acquisition costs, works, depreciation periods, tax limits and non-deducted depreciation tracking. Poor records weaken the tax return, loss tracking and the sale calculation.
Pre-sale checklist#
- retrieve the complete depreciation schedule;
- separate land, building, works and furniture;
- identify depreciation actually deducted for tax purposes;
- review possible legal exceptions;
- simulate the capital gain with the notary and accountant;
- compare sale, hold, corporate structuring or transfer;
- review CFE, possible VAT and social contributions depending on the activity.
What the investor must decide#
| Decision | Key question |
|---|---|
| Remain LMNP or become LMP by fact pattern | Is furnished-rental income becoming predominant? |
| Micro-BIC or real regime | Do expenses and depreciation justify the real regime? |
| Long-term or short-term rental | What impact on tax, social costs, VAT and management time? |
| Individual ownership or company | What is the wealth and succession plan? |
| Sell now or hold | What is the effect of depreciation adjustment? |
2026 watch points#
- Short-term furnished-rental micro-BIC thresholds changed; old allowances should not be used.
- LMP may trigger a different social and professional logic.
- LMNP capital gains should be simulated before signing a sale agreement.
- Short-term rentals can add city registration, tourist tax and para-hotel VAT issues.
- Non-residents should document the income-comparison test under the latest BOFiP guidance.
Questions frequentes
Can an investor freely choose LMP or LMNP?+
No. The status follows the statutory conditions. If the income and predominance tests are met, professional status may apply.
Does depreciation adjustment remove the benefit of LMNP real regime?+
No. It changes the exit analysis. The real regime can still be relevant when expenses, interest, depreciation and holding period support the cash-flow model.
Is non-deducted depreciation included?+
This must be analysed precisely. The rule focuses on depreciation allowed as a deduction. Accounting, tax, deducted and carried-forward depreciation should therefore be tracked separately.
Is LMP always more favourable?+
No. It may provide access to professional regimes but also creates social contribution and qualification issues. The right answer depends on the household, cash flow, sale plan and wealth objectives.
Does LMNP require bookkeeping?+
Under the real regime, yes in practice. Tax return, depreciation, expenses, evidence and carryforwards require reliable bookkeeping.
Official sources used#
- impots.gouv.fr: furnished rental, LMP status and capital-gain calculation.
- BOFiP: furnished-rental scope and professional status.
- Legifrance: 2025 Finance Act, article 84.
Article written by Samuel HAYOT
Chartered Accountant, registered with the Institute of Chartered Accountants.
Regulated French accounting and audit firm based in Paris 8, built to support companies across France with a digital and decision-oriented approach.
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