LMNP: New Rules, Social Charges & Capital Gains

In France, the tax treatment of rental income from furnished properties varies depending on whether the landlord qualifies as a professional or non-professional furnished landlord.

Non-Professional Furnished Landlord & LMNP

A landlord is considered a professional furnished landlord when both of the following conditions are satisfied:

• Furnished rental income exceeds €23,000, and
• Furnished rental income represents more than 50% of the landlord’s total household income.

Where one or both of these conditions are not satisfied, the landlord will generally be treated as a non-professional furnished landlord (loueur en meublé non professionnel – LMNP).

Increased Social Charges

Rental profits are subject to French income tax (at progressive rates of up to 45%, with an additional surcharge of up to 4%) and to social charges.

Historically, rental income has been subject to social charges at a standard rate of 17.2%. Under the French Financial Bill for 2026, the rate of social charges applicable to LMNP has increased to 18.6%. The position is now as follows:

• LMNP - social charges at 18.6%
• Professional furnished landlord – social charges at 17.2% (but social security contributions may also apply)
• Unfurnished rental income - social charges remain at 17.2%.
• Non-French residents affiliated with UK social security - reduced social charge rate of 7.5%

Reintegrating Depreciation under the LMNP Regime 

Further changes have been introduced to the French tax treatment of capital gains arising on the sale of properties let under the LMNP regime. Previously, LMNP landlords were able to deduct depreciation on their rental property from taxable rental income without any corresponding adjustment on disposal.

Since February 2025, the depreciation on the property must be added back when calculating the taxable capital gain. As a result, the total depreciation claimed during the rental period reduces the acquisition cost for capital gains tax purposes, thereby increasing the taxable gain and the overall French tax exposure on disposal of an LMNP property.

Example: Reintegrating the Depreciation into the Capital Gain Calculation

• Property purchase price €300,000
• Depreciation deducted from rental income over years (as an LMNP) €70,000
• Adjusted property purchase price €230,000
• Sale price €360,000
• Taxable capital gain €130,000

In contrast, had the depreciation not been re-integrated, the taxable capital gain would have amounted to €60,000.

For Legal and Tax Advice in France

Please note this article is for general information. You should not rely on it without advice on the specific facts of your case. Our legal specialist, François Mouniélou and his team focus on taxation, inheritance, and succession. Feel free to reach out to Mr Mouniélou for more details or to schedule a consultation.

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