Presented at the french Council of Ministers on 1 October 2026, the draft finance bill (PLF) for 2027 plans to cap property amortisation for non-professional furnished rental landlords (LMNP). A rate limited to 2.5%, a cap of €7,000 per tax household, the end of unlimited carry-forward of amortisation: the tax scheme favoured by private investors could lose much of its appeal as early as 2027 income. A breakdown of the measures, their quantified impact and the strategies to consider to protect your assets.
Key points to remember
- Measure: Article 7 of the 2027 PLF caps amortisation of a furnished rental property at 2.5% per year of its depreciable value, up to a limit of €7,000 per tax household.
- Tourist furnished accommodation: a stricter cap, at 1.5% and €5,000 per year.
- Carry-forward abolished: amortisation not deducted from 2027 onwards will be permanently lost. The accumulated stock as at 31 December 2026 will remain deductible until 2036, within the limit of 50% of annual profit.
- Timeline: applicable to 2027 income (declared in spring 2028), for both existing properties and new acquisitions.
- Exclusions: student residences, housing for young people in training, residences for elderly or disabled people, Ehpad (nursing homes).
- Status: this is a proposal, which may be amended during parliamentary debate.
Contents
- LMNP: reminder of the tax regime in force in 2026
- 2027 budget: what Article 7 of the PLF provides for
- What concrete impact on your taxation?
- Why the government wants to trim back LMNP
- Timeline: when would the reform apply?
- LMNP investors: what strategies should you adopt?
- FAQ: LMNP and the 2027 finance act
LMNP: reminder of the tax regime in force in 2026
The non-professional furnished rental landlord status (LMNP) concerns private individuals who rent out one or more properties equipped with the furniture necessary for everyday living. According to figures released by the government, 1.37 million households currently declare rental income from furnished lettings.
LMNP or LMP: the dividing line
A landlord remains "non-professional" as long as they do not simultaneously meet the two conditions set out in Article 155 of the French General Tax Code: furnished rental income exceeding €23,000 per year for the household, and income that exceeds the household's other earned income. Beyond that, they fall under the professional furnished rental landlord (LMP) regime, subject to different tax and social security rules.
Micro-BIC or actual expenses regime: two taxation options
Furnished rental income is taxed under the industrial and commercial profits (BIC) category, under two regimes:
Regime | Type of letting | Income cap | Calculation method |
|---|---|---|---|
Micro-BIC | Long-term furnished letting | €83,600 | Flat-rate allowance of 50% |
Classified tourist furnished accommodation | €77,700 | Flat-rate allowance of 50% | |
Unclassified tourist furnished accommodation | €15,000 | Flat-rate allowance of 30% | |
Actual expenses (réel) | All furnished lettings | No cap (by election or automatically above the thresholds) | Deduction of actual expenses + amortisation of the property and furniture |
Amortisation, the heart of the tax advantage
Under the actual expenses regime, the landlord deducts their costs (loan interest, property tax, co-ownership charges, insurance, management fees, works) but above all the amortisation of the property, i.e. the accounting recognition of its depreciation. Calculated excluding the value of the land, over a useful life of 25 to 40 years, it generally represents 2.5% to 4% of the property's value each year.
Depreciation cannot create a deficit, but the unused portion can be carried forward with no time limit. As a result, many investors pay no tax on their rental income for 10, 15 or 20 years. It is precisely this mechanism that the 2027 budget intends to regulate.
Good to know: since 15 February 2025, the depreciation deducted during the rental period has been added back into the capital gains calculation when the property is resold. The advantage of depreciation had therefore already been partially reduced, even before this new bill.
2027 Budget: what Article 7 of the PLF provides
A double cap on depreciation of the dwelling
Article 7 of the finance bill for 2027 introduces a cap on the deductible depreciation of furnished rental property:
Type of furnished rental | Maximum depreciation rate | Annual cap per tax household |
|---|---|---|
Classic furnished rental (long-term) | 2.5% of the depreciable value (excluding land) | €7,000 |
Furnished tourist accommodation (short-term) | 1.5% of the depreciable value (excluding land) | €5,000 |
The two limits are combined: whichever is lower applies. The €7,000 cap applies per tax household, not per property: an investor holding several furnished properties will therefore be capped on an overall basis. Furniture, which is depreciated separately, is not covered by this cap according to the analyses published.
The end of unlimited carry-forward of depreciation
This is undoubtedly the most far-reaching change. For financial years closed from 1st January 2027 onwards, depreciation that could not be deducted for lack of sufficient profit will no longer be eligible for carry-forward: it will be permanently lost.
For depreciation already accumulated, a transitional regime is provided for:
- the stock of depreciation carried forward as at 31 December 2026 is frozen;
- it remains deductible over the financial years 2027 to 2036;
- its deduction is limited each year to 50% of the profit from the furnished rental activity;
- the balance not absorbed by the end of 2036 will be lost.
Dwellings excluded from the cap
The text spares furnished rentals that meet a social or medico-social need:
- residences dedicated to students and young people in training;
- residences intended for elderly people;
- certain care establishments for elderly or disabled people;
- Ehpads (nursing homes) and long-term care establishments.
All properties are affected, including those already owned
No grandfathering clause is provided: the reform would apply to all furnished rentals, whether acquired before or after 2027. Investors who had built their financing plan on the absence of taxation for several years are therefore directly affected.
What concrete impact on your taxation?
The government's worked example
To illustrate its measure, Bercy uses the example of a studio purchased for €255,000, generating €12,000 in net rental income per year:
- today, the depreciation deducted reaches around €10,200 per year, bringing the taxable income down to €1,800;
- with the 2.5% cap, depreciation is limited to €6,375, and taxable income rises to €5,625, i.e. €3,825 more each year.
The additional annual cost (income tax and social security contributions) depends on the household's marginal tax bracket:
Marginal tax bracket | Additional tax per year |
|---|---|
11% | + €1,079 |
30% | + €1,805 |
41% | + €2,226 |
45% | + €2,379 |
Source: government example reported in the specialist press, October 2026.
Case of a larger property: the €7,000 cap comes into play
Let's take an illustrative example: an apartment with a depreciable value (excluding land) of €340,000, rented out for €18,000 per year, with €5,000 in deductible expenses.
- Current regime (4% depreciation): €13,600 in depreciation, zero taxable income, and €600 carried forward to subsequent years.
- Proposed scheme: 2.5% would give €8,500, but the cap brings the deduction down to €7,000. Taxable income then reaches €6,000 per year.
The more valuable the property, the more the cap per household weighs in: for estates made up of several furnished dwellings, the effect can be markedly more pronounced.
Net return and resale value
Beyond the annual tax, the reform changes the net return equation for furnished rental investments. Combined with the reintegration of depreciation into the capital gain since 2025, it reduces the tax gap between furnished and unfurnished rental. A development that could, in time, weigh on demand for certain properties typically intended for LMNP, such as studios and small units in city centres.
Why the government wants to trim LMNP
The government has a dual objective: bringing the taxation of furnished rental closer to that of unfurnished rental, and encouraging long-term rental, particularly in the face of the growth of tourist furnished lettings in high-demand areas. The harsher treatment reserved for tourist furnished lettings (1.5% and €5,000) reflects this intent.
The expected budgetary yield is estimated at €200 million per year.
This reform is part of a series of recent measures targeting furnished rental:
- 2025: reduction of the micro-BIC allowance for unclassified tourist furnished lettings to 30% (cap of €15,000);
- 15 February 2025: reintegration of depreciation into the calculation of the capital gain on resale;
- February 2026: creation of the private landlord status (the so-called "Jeanbrun" scheme), which opens up depreciation of 3.5% to 5.5% capped between €8,000 and €12,000 per year for unfurnished rental, subject to rent and income conditions, for acquisitions made between 21 February 2026 and 31 December 2028.
Landlord representatives, for their part, denounce yet another increase in taxation on private landlords, at a time when rental supply remains under strain.
Timeline: when would the reform apply?
Date | Step |
|---|---|
1st October 2026 | Presentation of the 2027 Finance Bill (PLF) in the Council of Ministers |
From 13 October 2026 | Review in public session at the National Assembly |
November 2026 | Vote on the finance bill as a whole |
31 December 2026 | Freeze on the stock of carried-forward depreciation |
1st January 2027 | Application of the cap to the financial years opened |
Spring 2028 | First tax return concerned (2027 income) |
31 December 2036 | End of offsetting of prior depreciation stock |
Note: the text is not final. Rates, caps, exclusions and transitional arrangements may change as parliamentary amendments proceed. Tracking of the legislative file is available on the website of the National Assembly.
LMNP investors: what strategies should be adopted?
1. Take stock of your situation now
First step: calculate the amount of your stock of depreciation carried forward as at 31 December 2026 and estimate whether it can be absorbed by 2036, taking into account the 50% limit on annual profit. Your accountant can carry out this projection.
2. Compare micro-BIC and the actual expenses regime again
With capped depreciation, the flat-rate 50% micro-BIC allowance may become competitive again for certain properties, particularly where expenses are low and the loan has been repaid. The comparison must be redone on a case-by-case basis.
3. Optimise deductible expenses
The cap targets depreciation of the property, not actual expenses. Loan interest, property tax, management fees and maintenance work remain deductible under the actual expenses regime. The timing of certain works may therefore be worth reconsidering.
4. Look at the excluded segments
Student residences and senior residences escape the cap under the current version of the text. They could gain relative attractiveness, subject to careful analysis of the location, the operator and the commercial lease.
5. Considering unfurnished rental or estate arbitration
Depending on your profile, the status of private landlord under unfurnished rental, or the sale of a property that has become less profitable in order to reinvest in another property better suited to the new tax landscape, may constitute alternatives.
Before making any decision to sell, it is essential to have your property valued at its fair value and to assess the impact of reintegrating depreciation into your capital gain, as selling a furnished rental property is subject to specific rules, particularly when a tenant is in place. A real estate advisor based near you can help you position your property within its local market and choose the right time to sell.
Are you wondering about the future of your furnished rental investment? Keep it, convert it to unfurnished rental or sell it: each option depends on the value of your property and your local market. Start with a free property valuation, then speak with one of the Capifrance advisors in your area to build the strategy best suited to your estate planning project.
FAQ: LMNP and the 2027 Finance Act
Has the 2027 LMNP reform been definitively adopted?
No. The capping of depreciation appears in Article 7 of the draft 2027 Finance Act, presented on 1 October 2026. It still has to be examined and voted on by Parliament, and may be amended before final adoption, expected by the end of the year.
What will the LMNP depreciation cap be from 2027?
The draft provides for depreciation limited to 2.5% per year of the value of the property (excluding land), up to a limit of €7,000 per tax household. For furnished tourist accommodation, the rate is reduced to 1.5% and the cap to €5,000.
Will my carried-forward depreciation be lost?
The stock of depreciation not deducted as of 31 December 2026 would remain usable from 2027 to 2036, up to a limit of 50% of annual profit. Amounts not offset by the end of 2036 would be lost. Depreciation not deducted from 2027 onwards would no longer be eligible for carry-forward.
Are properties purchased before 2027 affected?
Yes. The text does not provide for the previous rules to be maintained for properties already held: the cap would apply to all furnished rentals from 2027 income onwards.
Which furnished accommodations are exempt from the cap?
Student and young trainee residences, residences for elderly persons, certain care facilities for elderly or disabled persons, as well as nursing homes (Ehpad) and long-term care facilities.
Is the micro-BIC scheme affected by the reform?
No, the cap applies to depreciation, which only exists under the actual expenses regime (régime réel). The micro-BIC scheme retains its current thresholds and allowances (50% up to €83,600 for long-term furnished rental). It may become attractive again for some landlords.
Should you sell your LMNP property before 2027?
Not necessarily. The decision depends on your stock of depreciation, your tax bracket, the amount of your capital gain (which now incorporates deducted depreciation) and the local market. Having your property valued by a real estate advisor and discussing it with your accountant will allow you to make an informed decision.
Sources: draft 2027 Finance Act (Article 7), legislative file of the National Assembly; worked example from the Ministry of Economy and Finance; economic and real estate press (Le Figaro Immobilier, Capital, Les Echos Investir, Boursorama, JeChange, Meilleurtaux, MoneyVox), October 2026. Article written on the basis of the text presented on 1 October 2026, which may change.
Author
Frédéric Rémy – Director of Sales Performance
A real estate professional with several years of experience within the Capifrance network, I would like to share essential advice with you to help you successfully complete your property project with our advisors.
