Today, the status of Non-Professional Furnished Rental Company (LMNP) allows investors to benefit from advantageous taxation, notably through the depreciation of the various components of the property and the deduction of charges in the case of a declaration at actual costs.

Whether the property is rented for a short or long term, directly with the tenant or via a manager (para-hotelier or commercial lease); the LMNP regularly allows it to generate low or no tax revenues. In addition to this benefit during the period of ownership of the property, this scheme also had a benefit in case of transfer. Any capital gains were, until then, taxed on the individual’s real estate capital gains. This scheme therefore benefited from the allowances for duration of detention, without considering the depreciation carried out.

However, with the Finance Law adopted in February 2025, the LMNP no longer has this advantage since there is now the tax reintegration of accounting depreciation already deducted for determining the tax base of capital gains.

Here is an illustration of the calculation of property plus-value taxation for an individual renting in LMNP, before and after the reform.

Basic assumption:

The taxable base of the capital gain is €100,000, which corresponds to the difference between the purchase price and the sale price of the property. The owner has held the property for 16 years by declaring the income of this property with deduction of real expenses. He has deducted a total of €40,000 in accounting depreciation, or €2,500 per year. This value will be subtracted from the purchase price to increase the taxable base in case of reinstatement of accounting depreciation.

Calculation of the length of detention allowance:

Annual allowances start from the 6th year.

• For income tax (19%): Allowance = 6 % * 11 years = 66%

• For social security contributions (17.2%): Allowance = 1.65 % * 11 years = 18.15%

1. Before the 2025 finance law: no reinstatement of accounting depreciation

Taxable base IR = 100,000€   (1 - 66%) = €34,000

Tax = 24 000€   19% = 6 460€

Base imposable PS = 100,000€   (1 – 18.15%) = 81,850€

Social levies = 81 850€   17.2% = 14,078€

Total tax payable: €6,460 + €14,078 = €20,538

2. After the 2025 Finance Act: with reinstatement of accounting depreciation

Taxable base IR = 140 000€   (1 - 66%) = 47 600€

Tax = 47 600€   19% = 9,044€

Base imposable PS = 140,000€   (1 – 18.15%) = 114,590€

Social Contributions = 114,590€   17.2% = 19,709€

Total tax payable: €9,044 + €19,709 = €28,753

In this example, the reintegration of accounting depreciation increases the taxable base by €40,000 and therefore the total property capital gains tax by €8,215.

However, this adjustment of the 2025 Finance Law must not call into question the advantageous taxation of furnished rentals compared to bare rentals in terms of income tax, resale being not systematic.

In addition, it should be noted that furnished rentals in service residences, such as students for example, are not affected... now!

In a tax system in perpetual transition, it is essential today even more than yesterday to analyze each investment individually by considering the taxation so as not to have any bad surprises at the arrival. Each project requires a precise and personalized analysis to choose the most appropriate status.

The team of Finankap Group is at your disposal to assist you in your tax returns and select with you the best possible strategy to optimize your taxation.

Finankap Group, always by your side to give life to your desires.