LMNP réel 2026: how to cut the tax on your furnished rental income to zero

Under the LMNP actual-expenses regime, the accounting depreciation of the property and its furniture reduces — often to zero — your taxable profit, without any additional cash outflow. Across several hundred LMNP simulations run on RentValo, more than 70% show zero net tax during the first 10 years of ownership.

What the LMNP réel regime really is

The LMNP status (Loueur Meublé Non Professionnel — non-professional furnished landlord) applies as soon as you let a furnished home and your rental receipts stay below €23,000 per year or below 50% of your tax household's professional income. If you exceed both thresholds at once, you switch to LMP — a different regime with different rules.

Within LMNP, you choose between two tax regimes:

• Micro-BIC: a flat 50% allowance on gross rent, with no expense receipts required. Simple, but often less advantageous.
• Actual-expenses regime (régime réel): deduction of real expenses plus depreciation of the property and furniture. More complex to manage, but far better tax-wise in most cases.

This article deals exclusively with the actual-expenses regime.

Depreciation: the central mechanism

Depreciation is an accounting charge representing the theoretical decline in the property's value over time. Under the LMNP actual-expenses regime, you can depreciate:

• The building: generally over 25 to 30 years. For a €200,000 apartment (excluding land, estimated at 15-20% of the price), the depreciable base is about €165,000. Over 25 years, that is €6,600/year of deductible charge.
• Furniture and equipment: over 5 to 7 years. A furnished apartment kitted out for €8,000 generates roughly €1,140/year of accounting charge.
• Works: depending on their nature, some are deducted immediately as expenses, others are capitalised and then depreciated over several years.
• Acquisition costs (notary, agency, registration duties): depending on the accounting option chosen, these can be booked as expenses or added to the acquisition cost and then depreciated.

What this changes in practice: if your annual rent is €12,000 and your real expenses (loan interest, property tax, insurance, management) reach €5,500, your result before depreciation is €6,500. You use €6,500 of depreciation to bring the taxable profit down to zero, and the remaining €1,240 of depreciation becomes a carry-forward (ARD). You pay neither income tax nor social charges on this rent.

Deductible expenses under the actual-expenses regime

On top of depreciation, all expenses linked to the furnished rental activity are deductible:

• Loan interest and bank arrangement fees
• Property tax (excluding the waste-collection portion if recoverable)
• Non-recoverable co-ownership charges (major works, managing agent)
• Landlord insurance (PNO) and rent-default insurance
• Letting-management fees (6 to 10% of rent excl. tax)
• Accounting fees (compulsory under the actual-expenses regime: €300 to €600/year with a specialist accountant)
• Subscriptions and minor maintenance works

Deficits and carry-forward depreciation: two distinct rules

Under the LMNP actual-expenses regime, you must distinguish two carry-forward mechanisms governed by different rules.

Deductible expenses (interest, property tax, insurance, etc.) can, when they exceed rent, generate a BIC deficit. This deficit cannot be offset against your global income, but carries forward against LMNP profits over the following 10 years (FIFO rule: the oldest deficit is used first). Beyond 10 years, any unused deficit is permanently lost.

Depreciation, on the other hand, can neither create nor worsen a BIC deficit. When the available depreciation exceeds the result, the unused portion becomes Deferred Depreciation (ARD — Amortissement Réputé Différé), carried forward with no time limit against future profits. It is this stock of ARD that builds the cumulative long-term advantage of the actual-expenses regime.

Comparison with micro-BIC in 2026

On RentValo, the typical simulation for assessing the value of réel vs micro-BIC:

Assumptions: €200,000 apartment (building €165,000, land €35,000), furniture €8,000, total depreciation €7,740/year, real expenses €5,500/year, 30% marginal tax rate.

Here the actual-expenses regime saves €2,916/year in tax. Over 10 years, that is €29,160 of extra net income, with no change to the property or the rent.

A full LMNP réel worked example

Take a concrete case: a one-bedroom flat in Lyon, bought for €180,000, let furnished at €850/month.

Key figures

• Purchase price: €180,000 (land estimated at 15% = €27,000, building = €153,000)
• Furniture: €7,000
• Annual rent: €10,200
• Mortgage: €700/month over 20 years, of which €350/month is interest in year 1
• Property tax: €900
• Non-recoverable co-ownership charges: €600
• Landlord insurance (PNO): €200
• Accounting: €400

Year 1 calculation

Tax result: €0 taxable. Tax = €0. The €3,220 stock of ARD will be used in the following years, as interest falls and the result before depreciation rises.

Practical conditions and obligations

1. Elect the actual-expenses regime

If you are on micro-BIC by default, you can elect the actual-expenses regime up to the filing deadline for your income tax return of the year concerned (the former 1 February cut-off was removed by the 2022 Finance Act). The option is valid for 2 years and renews automatically.

2. Register with the business formalities one-stop shop

LMNP is a commercial activity. You must declare your activity via guichet-entreprises.fr to obtain a SIRET number. Free and compulsory.

3. Keep commercial accounts

Under the actual-expenses regime, you must keep accounts and file a tax return (form 2031 + schedules). In practice this requires an accountant specialised in LMNP (€300 to €600/year). This cost is itself deductible.

Capital gains at resale: what changed in 2025

This is the point you absolutely must know before investing under the LMNP actual-expenses regime.

Until 2024, depreciation taken during the holding period had no impact on the capital gains calculation at resale: the private individuals' property capital gains regime applied as is, with progressive holding-period allowances (income tax exemption after 22 years, social charges after 30 years).

Since the 2025 Finance Act (article 84, applicable to disposals from 15 February 2025), the depreciation actually allowed as a deduction during the rental period is added back into the taxable capital gain, including amounts taken before the reform came into force. This rule does not concern Deferred Depreciation (ARD), which was never allowed as a deduction from the taxable result.

The calculation method remains the private individuals' one (holding-period allowances, income tax exemption at 22 years, social charges at 30 years), but the taxable base is increased by the previously deducted depreciation. The tax advantage during the holding period is therefore no longer entirely neutral at resale.

Practical consequence:for long-hold strategies (> 22 years), the impact stays limited thanks to the allowances. For short- or medium-term resales, the tax optimisation must factor in this parameter from the outset. That is why RentValo includes this add-back in its projected capital gains calculation.

LMNP réel vs other regimes: when to choose réel?

The LMNP actual-expenses regime is particularly relevant in these situations:

• Older property with works: capitalised works boost deductible charges.
• High purchase price (> €150,000): the depreciable base is substantial.
• Investor with a high marginal tax rate (30% or 41%): the tax saving is proportional.
• Long-term mortgage (20-25 years): loan interest strengthens deductions in the early period.

Micro-BIC can remain relevant for lightly charged properties, with a low purchase price, or for investors who want to avoid accounting obligations.

What RentValo calculates for the LMNP réel regime

On RentValo, the LMNP réel simulation automatically includes:

• The depreciation schedule for the building (configurable 25-30 years), furniture (7 years) and works
• The deduction of all entered expenses
• The calculation of the taxable profit and the carry-forward ARD stock year by year
• The impact on after-tax net cash flow
• The side-by-side micro-BIC vs réel comparison
• The 10- and 20-year projection with IRL rent indexation
• The projected capital gain with depreciation add-back (2025 Finance Act)

The analysis remains a decision-support tool. For your personal tax situation, consult an accountant specialised in LMNP.

FAQ

In summary

In most furnished rental investment setups, the LMNP actual-expenses regime remains one of the most tax-efficient regimes:

• Building and furniture depreciation: wipes out the taxable profit for 10 to 15 years in most cases
• ARD (Deferred Depreciation): carried forward with no time limit against future profits
• BIC deficits: carried forward over 10 years against subsequent LMNP profits
• Capital gains: private individuals' regime (income tax exemption at 22 years, social charges at 30 years) — but deducted depreciation is added back since the 2025 Finance Act
• Trade-off: an annual accounting obligation (accountant, form 2031 tax return) + SIRET registration