France Real Estate Investment Guide
French real estate investment taxation. The guide covers: the LMNP (Loueur en Meublé Non Professionnel) — the most popular regime for furnished rental investors: the rental income is taxed as BIC (bénéfices industriels et commerciaux); the taxpayer can deduct the actual expenses (the "régime réel"): (a) the acquisition costs amortised over the useful life (the "amortissement du bâtiment" — typically 3–4% per year of the building value, excluding the land value), (b) the furniture amortisation (the "amortissement du mobilier" — typically 10–20% per year), (c) the maintenance and repair costs, (d) the property management fees, (e) the taxe foncière, (f) the loan interest, (g) the insurance; the amortisation of the building can reduce the taxable rental income significantly, often creating a tax loss (déficit foncier) that can offset other BIC income (but not salary income); the micro-BIC regime — the 50% standard deduction on gross rental income (capped at €77,700 of annual rental income); the LMP (Loueur en Meublé Professionnel) — the professional furnished rental regime: the taxpayer must meet two conditions: (a) the annual rental income exceeds €23,000, and (b) the rental income represents more than 50% of the household's professional income; the LMP regime allows the taxpayer to deduct expenses, including amortisation, and the losses can offset the taxpayer's total income (including salary income) — this is a significant advantage over LMNP where losses are limited to BIC income; the Pinel law (replaced by the Pinel + in 2024) — a tax reduction for the purchase of a new property for rental as a main residence: the tax reduction is 12% of the purchase price for a 6-year rental commitment, 18% for 9 years, and 21% for 12 years; the reduction is capped at €300,000 of purchase price; the property must be located in a "zone tendue" (high-demand area); the Pinel + (the new regime from 2024) imposes additional requirements (energy performance, quality standards) but offers higher reductions; the Malraux law — a tax reduction for the restoration of an entire building in a protected area (the "secteur sauvegardé"): the reduction is 22% or 30% of the renovation costs (depending on the location), capped at €400,000 of costs over 4 years; the Denormandie law — a tax reduction for the renovation of old housing in city centres: 12% to 21% of the renovation costs (capped at €300,000), similar to the Pinel regime; the LMNP and the capital gains on the sale — the sale of a rental property that has been amortised in the LMNP regime: the capital gain is calculated as the sale price minus the original acquisition price (the amortisation deducted over the years reduces the book value, potentially increasing the capital gain); the capital gain on the sale of an LMNP property is taxed as a BIC gain (the "plus-value professionnelle" — subject to the corporate tax rate of 25% for individuals who are not real estate professionals, or the personal income tax rate for LMP).
The LMNP regime, with the ability to amortise the building, is one of the most tax-efficient real estate investment structures in Europe. All amounts in Euros (EUR). For related reading, see our Property Tax Guide → and Investment Income Tax Guide →.
LMNP (Furnished Rental — Non-Professional)
- Tax regime: The LMNP regime applies to the rental of furnished property (the "location meublée") by a non-professional landlord. The income is reported as BIC (bénéfices industriels et commerciaux). The taxpayer can choose between: (a) the micro-BIC regime — a 50% standard deduction on gross rental income (capped at €77,700 of annual income), (b) the régime réel — the deduction of actual expenses plus the amortisation of the building (the building value divided by the useful life of 25–30 years) and the furniture (10–20% per year).
- Amortisation advantage: In the réel regime, the building amortisation (typically 3–4% per year of the building value excluding the land) is deductible from the rental income. This can reduce the taxable income to zero or create a tax loss. The loss can offset other BIC income (but not salary or pension income). The accumulated amortisation reduces the book value of the property, potentially increasing the capital gain on a future sale.
Pinel / Pinel + Tax Reduction
- New property investment: The Pinel law (and its successor Pinel +) provides a tax reduction (not a deduction — a reduction directly from the tax due) for the purchase of a new property in a high-demand area. The reduction is: 12% for 6 years, 18% for 9 years, 21% for 12 years. The purchase price is capped at €300,000 (€5,500/m²). The rental must be as a main residence at a capped rent (the "plafond de loyer"). The tax reduction can be claimed from the year the property is rented.
- Pinel + conditions (2024+): The Pinel + regime adds: (a) energy performance class A or B (the "classe énergétique"), (b) minimum living space and outdoor space, (c) the rent caps are slightly higher than the standard Pinel, (d) the reduction rates are the same as the standard Pinel (12%–18%–21%).
For the property transfer taxes and the taxe foncière, see our Property Tax Guide →. For the rental income taxation in the unfurnished sector (revenus fonciers), see our Personal Tax Guide →.