LMNP in 2026: Still a Tax Break, Now on Borrowed Time

This article is provided for general information only and does not constitute legal, tax or investment advice. Rules change and individual situations differ. Always confirm the current position with a qualified professional before acting.

You bought a two-bedroom flat in Lyon, furnished it, let it on a one-year lease and elected the régime réel. Your accountant depreciates the building, the kitchen and the sofa, and every spring your French tax bill on the rent comes to nothing. You have been told this is the way it works in France. It is, for now. What you may not have been told is how many official reports since 2023 have named the arrangement a niche fiscale and proposed to end or cap it. The two most recent, from the Senate in June and the Assemblée in July, landed three months before a finance bill that has to find money. This is a map of what has already changed, what the réel still does, who wants it gone, and what a foreign owner should do about it before the 2027 budget is written.

What has already changed for the small landlord

The tightening so far has fallen on the micro-BIC, the flat-rate regime for landlords with modest receipts who would rather not keep accounts. The loi Le Meur of 19 November 2024 rewrote article 50-0 of the tax code for income from 2025 onwards, and a decree of 29 June 2026 then lifted the general ceilings for their three-yearly revaluation. The table shows where each kind of furnished let now stands. The taxable share is what is left after the flat-rate allowance, and it bears income tax at your marginal rate plus social levies.

Two things in that table are easy to misread.

• The classic furnished lease to a tenant who lives there was never touched. Its allowance was 50 per cent before and is 50 per cent now, and the only movement in its ceiling is the routine uprating. The squeeze is on tourist lets. A classified gîte that used to pay tax on 29 per cent of its receipts now pays on half, and an unclassified flat pays on 70 per cent and drops out of the micro-BIC at €15,000. Above the ceiling you are on the régime réel whether you like it or not.
• The other change is quieter. The social security financing law for 2026 raised the CSG on income from capital by 1.4 points, so furnished rental profit, which the social security code treats as income from capital, now bears 18.6 per cent. Unfurnished rent was carved out and stays at 17.2 per cent, which is the first time in years the tax system has nudged against the meublé rather than for it. If you are a non-resident covered by the UK or EU social security systems, the 7.5 per cent solidarity levy carve-out applies to both, and the difference does not reach you.

Why the réel is the real prize

None of the above touches the mechanism that makes furnished letting attractive, which is not the allowance but the depreciation. The tax code treats furnished letting as a commercial activity, taxed as bénéfices industriels et commerciaux, and not as the civil activity of letting bare walls, which is taxed as revenus fonciers. A commercial landlord may do what a shopkeeper does: write off the cost of the assets used in the business over their useful life. The building is split into components and each is depreciated on its own schedule. The figures accountants typically use are around 2 per cent a year for the structure, 3 to 4 per cent for the roof and the electrics, and 10 to 15 per cent for fittings and furniture. The land is never depreciable, and neither is a property on which you have already claimed a tax reduction. Those annual charges sit on top of the real ones, interest, insurance, management, repairs. If in a given year the depreciation would push the result below zero, the excess is simply parked and carried forward with no time limit under article 39 C of the tax code. A well-financed flat can show a taxable result of nil for fifteen or twenty years. Our LMNP guide walks through the arithmetic and our micro-BIC versus réel calculator shows the break-even for your own numbers.

You do not need to be a professional landlord to use it. The non-professional status, LMNP, covers anyone whose furnished receipts are €23,000 or less, or whose other household income exceeds the rent. It comes with one limit worth stating correctly, because it is often misstated. An LMNP loss can only be set against furnished-letting income of the following ten years, never against your salary or pension. That is article 156 of the tax code, and it is why the niche erases the tax on the rent rather than the tax on everything. The one substantive attack on the réel so far came in the 2025 finance law. Since 15 February 2025 the depreciation you have deducted is added back when you sell, so the capital gain is computed on the written-down value rather than the purchase price. For a flat you intend to hold for decades, or to pass on, the bite is small, and the holding-period reliefs still run. We covered how that reintegration works in our piece on the 2026 LMP reform. Nor does the micro-BIC squeeze trap anyone. Article 50-0 lets a micro-BIC landlord opt for the réel within the filing deadline of the previous year’s return, or of the first return for a new activity. Most who are hit by the new allowances will do exactly that.

Who has asked for it to go, and when

Here is the part that should interest an owner more than another explanation of depreciation. The réel has been formally named as a problem by both chambers of parliament, by the government’s own tax-policy council and by two ministerial missions, in a sequence that has quickened.

What the numbers say, and what they do not

The July report is the first to publish the tax administration’s own distribution, and it cuts both ways. For 2023 income, 252,445 LMNP households declared a loss, against 118,534 that showed a taxable profit. The loss-makers saved an average of €32,363 in tax each, more than the roughly €24,600 the profitable ones paid on average, and a further €3.1 billion of past losses sits on the books waiting to be used. Half of the loss-makers are in the top tenth of households by taxable income, and the average saving climbs to €103,978 for the top 0.1 per cent. The administration’s own worked example is a taxpayer with €10 million of let property, €600,000 of rent and €200,000 of real costs. On a bare let he pays €248,800 of tax and levies. On a furnished one he depreciates €400,000 a year and pays nothing at all. The report’s phrase for that pace is “audacious”, and it is the reason the recommendation is a rate cap rather than a ban.

Then the other half. Of those 252,445 loss-making households, only 607 belong to the wealthiest tenth of the country by assets, and 47 to the wealthiest hundredth. A tax lawyer heard by the inquiry called it a regime for the upper middle class rather than for fortunes, and the tax bar’s professional body added that someone with tens of millions rarely parks much of it in furnished flats. The Senate’s 13,324 figure, meanwhile, is a count of wealth-tax households with a nil income-tax bill, of which the administration could only identify thirty that had used LMNP losses at all. Put the two documents together and the honest reading is this. The réel is expensive to the Treasury, concentrated among comfortable households, and marginal to the very rich. That makes it a poor answer to the question the Senate was asking, and a tempting line in a budget that needs several billion.

What a cap would cost you: one flat, five ways

Reports are abstract until they land on a tax return, so here is the same flat under each regime. Take a two-bedroom flat in Lyon bought for €300,000 with no mortgage, let at €1,100 a month, €13,200 a year. The land is taken at 15 per cent of the price, leaving €255,000 of building, and the furniture cost €12,000. Non-recoverable copropriété charges are €1,200, taxe foncière €1,100 and insurance €250. On the réel we add €600 for the accountant and €300 for the CFE business rate, both real costs of being commercial. For the réel as it stands today we use an ordinary component schedule. Structure is 55 per cent of the building at 2 per cent a year, roof and façade 15 per cent at 4 per cent, technical installations 15 per cent at 5 per cent, fittings 15 per cent at 10 per cent, and the furniture is written off over ten years. That produces €11,273 of depreciation a year, more than the €9,750 of rent left after charges, so the surplus is deferred under article 39 C and the taxable result is nil. The capped row applies 2 per cent to the whole building and 10 per cent to the furniture. The third row keeps only the furniture, which is the Le Meur and CPO scenario. The last two rows are the flat-rate regimes: the micro-BIC furnished at a 50 per cent allowance, and the same flat let unfurnished on the micro-foncier at 30 per cent, which beats the réel foncier here because there is no loan interest to deduct.

Read down the resident column. A cap at 2 per cent turns a nil bill into about €1,700 a year, which is a nuisance. Losing building depreciation altogether turns it into about €4,200, more than two-fifths of the rent left after charges, and close to what the same flat would cost you let unfurnished. For a non-resident with the levy carve-out the gaps are smaller but the ranking is the same. Two things follow.

• A capped réel still beats the micro-BIC on this flat, so the accountant stays worth paying.
• The whole furnished advantage on a debt-free flat is worth about €4,400 a year at a 30 per cent marginal rate, before you count the extra cost and paperwork of running it as a business. That is the number to weigh against the risk that the 2027 budget takes some of it away.

The costs nobody puts in the brochure

Whatever happens in October, the réel is already dearer to run than it looks from a rental-yield spreadsheet, and a foreign owner should price the following in. The regime requires proper double-entry accounts and an annual liasse fiscale filed with the business tax office, and a missed or defective filing is the classic way to have your depreciation disallowed on audit. Budget for a specialist accountant. Registration with the INPI one-stop shop to obtain a SIRET number is compulsory from day one, whatever the regime. A long-term furnished lease carries most of the tenant protections of an unfurnished one, including the DPE letting ban. A tourist let carries more: the national registration that became compulsory on 20 May 2026, the change-of-use authorisation in Paris and the larger cities, and, for short stays, social security contributions once receipts pass €23,000 a year under article L. 611-1 of the social security code, which apply in place of the 18.6 per cent levy rather than on top of it, LMNP or not.

Before buying with a tourist let in mind, three checks have moved from prudent to necessary. Energy: a new change-of-use authorisation now requires a DPE of E or better, and D from 1 January 2034. From that same date every tourist let other than the owner’s own home must meet the decent-housing energy standard, on pain of a €5,000 fine. Town hall: a commune may now set quotas of tourist-let authorisations, reserve zones for main residences, and cut the number of nights you may let your own home from 120 to 90. Paris and Marseille have done so. Nice did too, from January 2026, then reversed itself: the Métropole’s new rules from September 2026 put the ceiling back at 120 days, a reminder that these limits move in both directions. Our guide to letting a French main residence short term has the detail. Copropriété: since the loi Le Meur a general meeting can ban tourist lets in lots that are not someone’s main residence by the article 26 majority, a majority of all co-owners holding two-thirds of the votes, provided the building’s rules already exclude commercial activity. The Conseil constitutionnel upheld that power in April. Unanimity is gone. Read the règlement and the last three sets of minutes before you sign.

Our view: the niche will be capped, not killed

Three reports in three years have proposed ending building depreciation for furnished lets, and three finance laws have declined to do it. That is not indecision. The regime houses people, a great many of them students and mobile workers in the cities where housing is tightest. The July report says out loud what each finance law has assumed: abolition would deepen the housing crisis before it raised a euro. The Jeanbrun amortissement is the tell: rather than take depreciation away from the meublé, the government gave a version of it to the bare let, on conditions. The direction of travel is convergence upwards, not a cliff.

What is coming, on the evidence, is a ceiling on rates. The Assemblée’s rapporteur asked for it explicitly, the administration’s own example of a €10 million portfolio written off in twenty years is the abuse it is aimed at, and a cap costs the Treasury nothing to draft. A cap is survivable for an owner who bought a flat rather than a tax scheme, because a 2 per cent structure and a 10 per cent kitchen are what a careful accountant books already. It is fatal to the schemes sold on a five-year write-off. The real question for the autumn is not whether the réel survives, but whether flats already in the system are protected by transitional rules. On that, no report has said a word, and that is the line to watch when the bill is published.

FAQ: the future of the LMNP tax break

Has LMNP depreciation been abolished?

No. As of September 2026 the régime réel is unchanged. What has changed is the micro-BIC for tourist lets, the social levy rate, and the capital-gains rule that adds deducted depreciation back on sale. Several official reports recommend ending or capping depreciation, and the 2027 finance bill is the next occasion.

My long-term furnished flat is on the micro-BIC. Did the loi Le Meur raise my tax?

Not through the allowance, which stays at 50 per cent for a classic furnished lease. The cuts to 30 per cent and to a €15,000 ceiling apply to unclassified tourist lets, and the cut from 71 to 50 per cent to classified ones and chambres d’hôtes. Your rate did rise through the social levies, from 17.2 to 18.6 per cent, unless the 7.5 per cent non-resident carve-out applies to you.

Can an LMNP loss reduce the tax on my salary or pension?

No. Under article 156 of the tax code a non-professional furnished-letting loss can only be set against furnished-letting income of the following ten years. Only professional landlords, LMP, can set losses against other income.

If depreciation is capped, will it apply to a flat I already own?

Nobody knows. None of the reports proposes transitional rules, and the 2025 reintegration rule applied to existing owners with no transitional protection. Assume no protection until a bill says otherwise.

Is it still worth choosing furnished over unfurnished for a new purchase?

Usually yes for the rent, since the real charges plus a conservative depreciation still beat the 30 per cent micro-foncier allowance on most flats. But run the numbers with depreciation capped and with none, and compare them with the Jeanbrun regime if you are buying a new-build flat to let unfurnished before the end of 2028.