In brief:
- LMNP neutralizes rental income tax for 20 to 30 years via depreciation.
- Real regime is preferable to micro when charges exceed 30 percent of rents.
- SCPIs offer average 2026 yield between 4 and 5.5 percent, without management.
- Pinel scheme ended in 2024 but Denormandie and LLI remain active.
Real estate investment taxation: 2026 overview
Real estate investment taxation in France rests on several regimes according to rental type and investment volume. The right tax choice can double net yield.
The 5 main regimes
- LMNP (Non-Professional Furnished Lessor): property depreciation
- LMP (Professional Furnished Lessor): same principle with professional status
- Micro unfurnished income: 30 percent deduction on rents
- Real unfurnished income: deduction of actual charges
- Pinel / Denormandie / LLI: tax reduction on commitment
Tax comparison
| Regime | Property type | Main advantage | Cap |
|---|---|---|---|
| LMNP real | Furnished | Property depreciation | No cap |
| LMP | Pro furnished | Deductible deficit | Over 23 000 euros rents |
| Micro unfurnished | Unfurnished | 30 percent deduction | Under 15 000 euros |
| Real unfurnished | Unfurnished | Deduct charges + works | No cap |
| Denormandie | Unfurnished (old) | Tax cut 12-21 percent | Capped to conditions |
The LMNP case, investment star
“LMNP with depreciation reaches net yield nearly equal to gross yield for the first 20 years.” — French National Real Estate Federation (FNAIM)
Concretely, on a 200 000 euros property generating 10 000 euros in annual rent:
- Annual depreciation: 5000 to 6000 euros
- Actual charges: 2000 to 3000 euros
- Taxable income: close to zero for 20 to 30 years
Capital gains tax
French real estate capital gains tax applies a progressive deduction:
- Less than 5 years ownership: full taxation (19 percent + 17.2 percent social contributions)
- 6 to 21 years: progressive IR deduction
- 22 years: total IR exemption
- 30 years: total IR + social contributions exemption
Method to optimize taxation
- Identify property nature (furnished or unfurnished)
- Calculate charges and works over 5 years
- Simulate each regime with an accountant
- Anticipate capital gain on resale
- Adjust strategy by horizon (short, medium or long term)
For beginners, our rental investment guide details initial steps. Home loan financing specifies 2026 bank conditions. For those still hesitating, see the buy or rent comparison.
Frequently asked questions
Which tax regime to choose for rental investment?
The choice depends on rental type and charge level. LMNP real is optimal for furnished rental (property depreciation). For unfurnished rental, real regime is preferable if charges exceed 30 percent of rents. Pinel and Denormandie schemes offer tax reduction but impose constraints (rent cap, duration).
How does LMNP taxation work?
LMNP regime allows depreciating the property (excluding land) over 20 to 30 years, generally between 2 and 3 percent per year. This accounting expense is added to real charges and can fully neutralize taxable rents for 20 to 30 years, resulting in near tax exemption.
Are SCPIs a good investment?
SCPIs offer an average yield of 4 to 5.5 percent in 2026 with an accessible entry ticket (1000 to 10 000 euros). They are taxed as rental income (marginal) but diversify risk and eliminate management. Recommended for passive or complementary investment.