The LMNP reform that came into effect in mid-February 2025 radically changes the calculation of net profitability for furnished rental investments. Any real estate tax optimization strategy that ignores the reintegration of depreciation into the capital gain is now based on an obsolete model. We review the technical adjustments needed to adapt your setups to this new framework.
Reintegration of LMNP Depreciation: Recalculate the Net Capital Gain Before Any Sale
Article 84 of the 2025 finance law (law n° 2025-127 of February 14, 2025) mandates the reintegration of deducted depreciation in the calculation of the taxable capital gain for non-professional furnished landlords under the real regime. The acquisition price is reduced by the total amount of depreciation applied during the rental period, which mechanically inflates the taxable base.
The main trap: this rule applies to all sales made from February 15, 2025, regardless of the date the property was rented out. A ministerial response from March 24, 2026, confirms that rentals prior to 2015 are affected. A property depreciated for twelve years will therefore see its theoretical capital gain explode at the time of resale.
The classic strategy (maximizing depreciation and then selling after a holding period discount) loses much of its appeal. We recommend systematically simulating the tax differential before any sale project, incorporating the accumulated depreciation line by line. Specialized platforms like fiscal.immo allow for refining this type of projection by cross-referencing tax regimes and holding horizons.
Real Regime or Micro-BIC for Furnished Rentals: The Threshold for Switching Has Changed
The reintegration of depreciation into the capital gain modifies the equilibrium point between the real regime and micro-BIC. Until now, the real regime applied as soon as deductible expenses (loan interest, work, depreciation of the property and furniture) exceeded the flat-rate allowance of micro-BIC. This reasoning remains valid during the rental phase, but it now must also account for the additional tax cost upon resale.
An investor planning to hold the property for less than fifteen years should accurately quantify the annual tax savings generated by depreciation and then compare it to the additional taxation on the capital gain at the time of sale. For properties with low appreciation potential, micro-BIC becomes competitive again.
On the other hand, for a wealth investor aiming for long-term holding (beyond twenty-two years), the progressive exemption from capital gains under income tax largely neutralizes the effect of reintegration. The real regime then remains relevant, provided that the impact of social contributions, which are fully exempt only after thirty years of holding, is not underestimated.
Criteria to Consider Before Choosing
- Planned holding horizon: the shorter it is, the more micro-BIC deserves to be studied to avoid the reintegration of high depreciation over a short period
- Amount of actual deductible expenses excluding depreciation (loan interest, insurance, management, maintenance work): if they are sufficient to create a deficit, the depreciation of the property becomes less decisive
- Appreciation potential of the local market: a property located in a high-demand area will generate a significant capital gain, amplified by reintegration
- Overall situation of the tax household: marginal tax rate, existing rental income, exposure to IFI
Property Deficit and Deductible Work: The Underutilized Lever in Unfurnished Rentals
The property deficit remains a powerful mechanism for investors in unfurnished rentals, and it is not affected by the LMNP reform. Maintenance, repair, and improvement work can be deducted from rental income, and then from global income up to a limit of 10,700 euros per year. The excess can be carried forward to the rental income of the next ten years.
The strategic interest of the property deficit lies in its lack of overall capping on tax niches. Unlike tax reductions (such as ex-Pinel), it does not count towards the annual cap on tax benefits. For a highly taxed taxpayer with significant rental income, concentrating work in one or two tax years allows for creating a deficit that can be carried forward for a decade.
We observe that many investors underestimate the nature of eligible work. Reconstruction or expansion expenses remain excluded. However, replacing a heating system, repairing a roof, or bringing electrical systems up to standard are deductible, provided that the property is actually rented or offered for rent.
SCI under IS and Dismemberment: Arbitrating the Holding Structure
The choice between holding in one’s name, SCI under IR, and SCI under IS determines the entire taxation of real estate assets. The SCI subject to corporate tax allows for the depreciation of the property without undergoing the reintegration provided for LMNP, since this reform only concerns individuals subject to the capital gains regime for individuals.
The downside: the distribution of dividends by the SCI under IS is subject to flat tax or progressive scale after deduction. And the capital gain upon resale is calculated according to the professional capital gains regime, without any holding period discount. In very long holdings, SCI under IR or direct holding often remains more advantageous.
The temporary dismemberment of property (acquisition of bare ownership only) is another avenue. The investor does not receive any rental income during the dismemberment period, so there is no taxation on rents. The property also exits the scope of IFI for the entire duration of the temporary usufruct. At the end of the dismemberment, the bare owner regains full ownership without additional transfer taxes.
When SCI under IS Takes Precedence
The SCI under IS becomes relevant when the investor wishes to capitalize income within the structure without distributing it, and when they plan to transfer shares rather than sell the property. The taxation of the transfer of SCI shares (with a discount for illiquidity) can prove significantly more favorable than the direct sale of a property.
The LMNP reform mechanically pushes some investors towards SCI under IS to retain the benefit of depreciation without penalty upon resale. This structural migration must be anticipated before acquisition, as transferring a property held in one’s name to an SCI generates transfer taxes and taxation on latent capital gains. A change of course along the way can be costly.
