Real estate · Taxation
Rental property tax: micro, réel, LMNP, capital gains
Your rental income is never taxed under the “flat tax”. It follows the income tax scale (barème de l’impôt sur le revenu), together with social levies (prélèvements sociaux): 17.2% on an unfurnished letting, 18.6% on a furnished one from 2025 income onwards. We explain how to choose your regime, lighten the bill (déficit foncier, depreciation) and anticipate the tax due when you sell.
The basic rule
Rental property is never taxed under the PFU
This is the rule to hold on to before anything else. The “flat tax” (PFU, prélèvement forfaitaire unique) of 31.4% in 2026 applies to investment income and crypto-assets — not to property. Your rental income is taxed in two layers:
- the progressive income tax scale, according to your marginal band (0, 11, 30, 41 or 45%);
- social levies: 17.2% on an unfurnished letting (CSG 9.2% + CRDS 0.5% + prélèvement de solidarité 7.5%), but 18.6% on a furnished one from 2025 income onwards, the CSG there having been raised to 10.6%. A fraction of the CSG is deductible from your taxable income the following year if you are taxed on the scale.
Your effective rate therefore depends on your band: the same rent costs more to a household in the 41% band than to one that pays no income tax. That is what makes the choice of regime (micro or réel) decisive.
Unfurnished letting · revenus fonciers
Micro-foncier or régime réel?
Letting a property empty (unfurnished) falls under revenus fonciers, the French property income category. Two possible regimes, depending on your rent and your costs.
The simplest
Micro-foncier
- Automatic if your gross revenus fonciers are ≤ €15,000 a year.
- Flat-rate allowance of 30% — 70% of the rent is taxed, with no receipts to produce.
- No déficit foncier possible.
- Ideal if your actual costs are low (little in the way of works or loan interest).
The most tax-efficient
Régime réel
- Compulsory above €15,000, optional below it (irrevocable for 3 years).
- Deducts your actual costs: loan interest, maintenance / repair / improvement works, taxe foncière, insurance, management fees.
- Construction, reconstruction or extension works are not deductible.
- Opens up the déficit foncier when costs exceed the rent.
The déficit foncier
When your deductible costs (excluding loan interest) exceed your rent, you create a déficit foncier — a rental loss on unfurnished property. The part excluding interest is offset against your overall income — not only against your revenus fonciers — up to €10,700 a year. The excess and the loan interest can be carried forward against your revenus fonciers for the following 10 years.
A higher cap of €21,400 a year applies to energy renovation works taking the property out of passoire thermique status (an energy-inefficient home: class E, F or G moving up to A, B, C or D). Originally opened for expenses paid up to 31/12/2025, it was extended to 31/12/2027 by the 2026 finance act. The higher cap is elective and requires supporting documents (an energy performance certificate before and after the works).
Furnished letting · LMNP (BIC)
Micro-BIC or the régime réel with depreciation?
Furnished letting falls under BIC (bénéfices industriels et commerciaux, the business-profits category), as an LMNP (loueur en meublé non professionnel, the French non-professional furnished-letting regime). The thresholds and allowances were tightened by the loi Le Meur (law no. 2024-1039 of 19/11/2024).
Flat rate
Micro-BIC
- Long-term furnished letting / classified tourist accommodation: allowance of 50%, cap of €83,600 for 2026 income (against €77,700 for 2025 income, filed in 2026).
- Unclassified tourist accommodation: allowance cut to 30%, cap lowered to €15,000 (loi Le Meur).
- Simple, but no depreciation and no actual costs deductible.
Accounting
Régime réel with depreciation
- Deducts costs and the depreciation of the property (excluding the land), of the furniture and of the works.
- Often cancels out the whole taxable result for years on end.
- Requires proper accounts (component-by-component depreciation) and, from the 2nd year, the CFE (cotisation foncière des entreprises, the local business rate).
Worth noting: the three-yearly revaluation of the micro-BIC cap is settled — €77,700 for 2025 income (filed in 2026), €83,600 for 2026 to 2028 income. The threshold for unclassified tourist accommodation stays at €15,000. Source: service-public.gouv.fr (F32744), updated 15/04/2026 — checked 08/2026.
Estimate
Micro or réel: what you actually pay
Compare the tax on your rental income under both regimes, for unfurnished or furnished letting, using your tax band and the social levies of that regime: 17.2% unfurnished, 18.6% furnished. Everything is worked out in your browser.
Gross rental receipts over the year (rent excluding charges).
Per year, under the régime réel: loan interest, taxe foncière (the owner’s local property tax), insurance, works, management…
Your income tax rate (0, 11, 30, 41 or 45%).
Unfurnished letting (revenus fonciers): 17.2%. Furnished letting (LMNP): 18.6% from 2025 income onwards. The PFU flat tax does not apply to property.
30% unfurnished, 50% furnished (30% on unclassified holiday lets).
€15,000 (unfurnished / unclassified), €83,600 (long-term or classified furnished letting, 2026 receipts).
- Most favourable tax regime
- Régime réel (actual expenses)
- Estimated tax: 3 115 € a year (income tax + 17,2 % of social levies).
Micro versus régime réel
- Micro-foncier (allowance 30 %)
- 3 172 €
- Régime réel (expenses deducted)
- 3 115 €
- Saving from the better regime
- 57 €
How the figure is built
- Rate applied (TMI + social levies)
- 47,2 %
- Taxable base under the micro regime
- 6 720 €
- Deductible expenses under the régime réel
- 3 000 €
- Taxable base under the régime réel
- 6 600 €
An estimate, not advice
Indicative estimate, not a contractual offer — the actual terms depend on your own situation and are set by the institution or the tax authority. Check with a professional.
When you sell
Property capital gains
An individual’s capital gain (other than on the main home) is taxed at 19% income tax + 17.2% social levies, that is 36.2% nominal before allowances. On top of that comes a surtax of 2% to 6% on the share of the taxable gain (after the income tax allowance) above €50,000.
Allowances for length of ownership gradually reduce the bill:
- Income tax: 6% a year from the 6th to the 21st year, then 4% in the 22nd → income tax exemption at 22 years.
- Social levies: 1.65% a year from the 6th to the 21st year, 1.60% in the 22nd, then 9% a year from the 23rd to the 30th → social levies exemption at 30 years.
The main home is entirely exempt from capital gains tax (art. 150 U, II-1° of the CGI), income tax and social levies alike — the major tax advantage of your own home over a rental property.
Is the tax bill too heavy? Compare the alternatives
Not every form of property investment is taxed the same way. The comparison tool sets out how each one is treated for tax, with no promise of returns.
Estimate
Your capital gains tax when you sell
Price, fees, works, length of ownership, main home or not, LMNP depreciation to add back: estimate the gain, the allowances, the income tax, the social levies and any surtax.
Price originally paid for the property.
Sale price stated in the deed.
Surveys, mortgage release… deducted from the sale price (0 if none).
Full years between purchase and sale. Income tax exemption at 22 years, social levies at 30 years.
Furnished landlord (LMNP) under the régime réel: depreciation deducted, added back since 15/02/2025 (0 otherwise).
Property capital gains in 2026: 19% (flat rate, outside the PFU).
Property in 2026: 17.2% (property is outside the PFU flat tax).
- Total capital gains tax
- 15 995 €
- Income tax (19 %) + social levies (17,2 %) + any surcharge, after allowances.
From the purchase to the gross gain
- Acquisition costs taken into account
- 15 000 €
- Works taken into account
- 30 000 €
- Uplifted purchase price
- 245 000 €
- Sale price net of costs
- 300 000 €
- Gross gain
- 55 000 €
Allowances & taxation
- Income tax allowance (ownership period)
- 30,00 %
- Gain taxable to income tax
- 38 500 €
- Income tax (19 %)
- 7 315 €
- Social levies allowance (ownership period)
- 8,25 %
- Gain taxable to social levies
- 50 463 €
- Social levies (17,2 %)
- 8 680 €
- Surcharge (large gain)
- 0 €
- Total tax
- 15 995 €
Proceeds of the sale
- Sale price net of costs
- 300 000 €
- Capital gains tax
- -15 995 €
- Net proceeds (after tax)
- 284 005 €
An estimate, not advice
Indicative estimate, not a contractual offer — the actual terms depend on your own situation and are set by the institution or the tax authority. Check with a professional.
Do not forget
Local taxes and the IFI
Taxe foncière
Owed by whoever owns the property on 1 January. Base = the valeur locative cadastrale (cadastral rental value) × rates voted locally. No national cap: it varies a great deal from one commune to the next.
Taxe d’habitation
Abolished on the main home, but still charged on second homes. A surcharge of 5% to 60% can be voted in high-demand areas (each commune sets its own rate).
IFI
Impôt sur la fortune immobilière, the wealth tax on property, due if your net taxable property wealth exceeds €1.3m on 1 January. Banded scale from 0.5% to 1.5%, with a 30% allowance on the main home.
Frequently asked questions
Rental property tax: the essentials
Is rental income subject to the 31.4% PFU (flat tax)?
No. Unlike investment income and crypto-assets (PFU of 31.4% in 2026), property income never falls under the prélèvement forfaitaire unique, France’s flat tax. Unfurnished letting (revenus fonciers) and furnished letting (BIC/LMNP) alike are taxed on the progressive income tax scale, according to your marginal band, together with social levies (prélèvements sociaux): 17.2% on an unfurnished letting, 18.6% on a furnished one from 2025 income onwards.
Micro-foncier or régime réel: which should you choose for an unfurnished letting?
The micro-foncier applies a flat-rate allowance of 30% (so 70% of your rent is taxed), as long as your gross revenus fonciers stay below €15,000 a year. The régime réel deducts your actual costs (loan interest, maintenance, repair or improvement works, taxe foncière, insurance, management fees). The régime réel becomes worthwhile as soon as those costs exceed 30% of the rent, and it opens up the déficit foncier. Opting for the régime réel is irrevocable for 3 years.
How much déficit foncier can you offset against overall income?
Under the régime réel for an unfurnished letting, the part of the loss excluding loan interest is offset against your overall income up to €10,700 a year; the excess and the loan interest can be carried forward against your revenus fonciers for the following 10 years. A higher cap of €21,400 a year applies, on election and against supporting documents, to energy renovation works taking the property out of passoire thermique status: originally set for expenses paid up to 31/12/2025, it was extended to 31/12/2027 by the 2026 finance act (ANIL analysis, checked 08/2026). The BOFiP doctrine online had not yet been updated for that extension at this date: check it again before building a deal on it.
Is the capital gain on the sale of your main home taxed?
No: the sale of your main home is fully exempt from capital gains tax (art. 150 U, II-1° of the CGI). The gain on a rental property, by contrast, is taxed at 19% income tax + 17.2% social levies, with allowances for length of ownership (income tax exemption at 22 years, social levies exemption at 30 years) and a surtax of 2% to 6% above €50,000 of taxable gain.
What did the LMNP depreciation reform change for capital gains?
Under a reform applying to disposals made on or after 15/02/2025, the depreciation deducted under the régime réel in LMNP is added back into the capital gains calculation: it reduces the acquisition price used, which increases the taxable gain when you sell. Some serviced residences (student, senior) are excluded. This point is technical and liable to change: have it confirmed by an expert-comptable (chartered accountant) or a notaire before you sell.
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Sources & verification
Rules and figures checked in 07/2026, to be double-checked before any decision:
- Capital gains on property for individuals (19% + 17.2% rates, allowances for length of ownership, surtax, main-home exemption): service-public.gouv.fr (F10864).
- Micro-foncier, régime réel, déficit foncier, micro-BIC / régime réel for furnished letting, IFI: impots.gouv.fr and its doctrine (BOFiP).
- Reform of the furnished-letting thresholds and the add-back of LMNP depreciation: law no. 2024-1039 of 19/11/2024 (loi Le Meur), BOFiP doctrine.