Income from furnished rentals falls under industrial and commercial profits (BIC), rather than property income. This classification changes how the income is declared, the applicable allowances, and the deductible expenses. Two tax regimes coexist, and the choice between them directly affects the amount of tax owed each year.
Reintegration of depreciation upon resale: what has changed in 2025
The finance law for 2025 introduced a rule that affects owners operating a property under the LMNP regime in the real regime. Depreciation deducted during the rental period is now reintegrated into the calculation of the capital gain when the property is sold.
In practical terms, an owner who has depreciated their property over several years reduces their taxable income each year. However, at the time of sale, the acquisition price used to calculate the capital gain is reduced by the total amount of depreciation claimed. The taxable capital gain increases accordingly.
This mechanism already existed for professional furnished rental operators (LMP). Its extension to LMNP under the real regime changes the long-term profitability calculation. An investor planning to sell in a few years must compare the annual tax benefit of depreciation with the additional tax cost upon resale, making wealth analysis significantly more complex than before. To delve deeper into the tax rates on Immo Factory, the details of the applicable scales are presented by regime.
Micro-BIC regime and flat-rate allowance on furnished rental income
The micro-BIC regime automatically applies below a certain threshold of annual receipts. Its operation is based on a flat-rate allowance applied to the gross revenue, intended to cover all the owner’s expenses.
For long-term furnished rentals (tenant’s primary residence), the allowance is 50%. The owner declares their rents, and the tax administration calculates the taxable income after automatically deducting half.
Tourist rentals: allowances revised downwards
The so-called “Le Meur” law (law n° 2024-1039 of November 19, 2024) has modified the rules for seasonal rentals. The allowance applicable to unclassified tourist rentals has been reduced, making this type of rental less fiscally advantageous than a year-round furnished rental.
Classified tourist rentals retain a higher allowance, but the classification conditions have become stricter in parallel. Municipalities now have enhanced powers to regulate tourist rentals: mandatory registration, quotas, restrictions on changes of use.
Long-term furnished rentals benefit from a more stable tax framework than seasonal rentals, whose advantages are gradually diminishing.
Real regime in furnished rentals: depreciation and BIC deficit
The real regime allows for the deduction of actual expenses incurred by the owner. It becomes mandatory beyond the micro-BIC revenue threshold but remains accessible by choice below it.
Deductible expenses under the real regime include:
- Loan interest related to the acquisition or work on the furnished rental property
- Management, insurance, accounting fees, and property taxes
- The depreciation of the real estate, furniture, and equipment, spread over their estimated useful life
- Maintenance and repair work incurred during the year
Depreciation is the main lever of the real regime. It allows for the recognition of an accounting expense without cash outflow, sometimes reducing taxable income to zero. When expenses exceed revenue, the generated BIC deficit can be carried forward to the same type of income in subsequent years.
Progressive income tax scale and social contributions
BIC from furnished rentals is added to the other income of the tax household. They are subject to the progressive income tax scale, with brackets ranging from 0% to 45% depending on the overall taxable net income.
In addition to this tax, social contributions at a rate of 17.2% are applied to the net rental income. In total, the actual tax burden on furnished rental income can exceed 40% for a taxpayer in the higher brackets, or remain close to 17.2% if the BIC result is brought to zero by expenses and depreciation under the real regime.
LMNP or LMP status: the income threshold is not enough
The status of non-professional furnished rental operator (LMNP) applies as soon as at least one of the following two conditions is met: the annual income from furnished rentals of the tax household is less than 23,000 euros, or this income is less than the other professional income of the household.
The transition to the status of professional furnished rental operator (LMP) requires that both thresholds be exceeded simultaneously. The comparison between the rents received and the professional income of the household is often more decisive than the mere amount of rental income.
The consequences of the LMP status are significant:
- The BIC deficit becomes deductible from the household’s overall income, without category limitation
- Capital gains from sales fall under the regime of professional capital gains, with the possibility of exemption after a certain period of activity
- Social contributions replace social levies, which increases expenses but opens rights to social protection
A household with fluctuating professional income can switch from one status to another from year to year, with sometimes poorly anticipated tax consequences.
The choice between micro-BIC and the real regime, combined with the LMNP or LMP status, creates four distinct tax configurations. Each combination produces a different tax result on the same amount of rents received. The most underestimated variable remains the planned holding period: since the 2025 reform, an investor in LMNP under the real regime who sells quickly may find the advantage of depreciation completely neutralized by capital gains taxation.
