Understanding French Rental Property Taxation
The French furnished rental status offers two tax regimes: Micro-BIC with a 50% flat-rate allowance on income, and the Real Expense regime which allows you to deduct actual expenses and apply depreciation.
The Micro-BIC Regime
Simple and automatic, it applies a 50% allowance on your rental income. Ideal if your actual expenses are less than 50% of your rent.
The Real Expense Regime
More complex but often more advantageous for investors, it allows you to deduct your actual expenses (renovations, loan interest, insurance) and depreciate the property over 30 years and furniture over 7 years.
Frequently Asked Questions
LMNP (Loueur Meublé Non Professionnel) is a French tax regime for renting furnished properties. It offers tax benefits through property and furniture depreciation, which reduces your taxable base and can significantly lower your tax liability.
Micro-BIC is simpler (50% flat-rate allowance) but the Real regime is often more advantageous if your actual expenses exceed 50% of rent or if you have significant renovation costs. Property depreciation can substantially reduce your tax burden.
You switch to LMP (Professional Furnished Rental) status if your annual rental income exceeds €23,000 AND represents more than 50% of your professional income. Otherwise, you remain under LMNP status.
No, land is not depreciable under French LMNP rules. Only the building can be depreciated over 30 years. Land is generally estimated to represent about 15% of the total purchase price, with the building accounting for 85%.