PLF 2027: WARNING on LMNP taxation!

Real Estate
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Hello everyone,

I’m creating a dedicated thread because the 2027 Finance Bill submitted yesterday contains a reform of the LMNP real regime that seems quite significant to me, particularly for those who already have several years of accumulated depreciation.

At this stage, nothing has been voted on and the text will obviously evolve in Parliament. But Article 7 provides, in its current wording, several quite substantial changes (link: National Assembly).

For standard LMNP properties, depreciation of premises would now be limited to 2.5% per year, with an additional cap of €7,000 per year per tax household. For tourist rentals: 1.5% and €5,000.

Furthermore, the depreciation carryforward mechanism would also be significantly modified.

Depreciation already accumulated before 2027 would remain usable until December 31, 2036, but only up to 50% of the taxable income remaining after application of the current year’s depreciation.

And most importantly, from 2027 onwards, depreciation that could not be deducted for a given year would no longer be carried forward to subsequent years. This is quite a radical change compared to the current functioning of the LMNP real regime.

In other words, for many of us who already own an LMNP property, there would potentially be two issues:

  • a reduction in deductible depreciation each year if the current depreciation of the property exceeds 2.5%;

  • and especially a much more limited ability to use in the future depreciation that could not be deducted.

All of this comes in addition to the 2025 reform on the reintegration of depreciation in the calculation of capital gains upon resale.

BFM Business has also just covered this:
BFM Business on X – LMNP taxation and 2027 Finance Bill

I’m curious to hear the opinions of those who have already reviewed the text.

If the text remains as is, I have the impression that the impact could be quite different depending on the age of the LMNP and the stock of depreciation already accumulated.

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The game-changing point is the end of carry-forward for unused depreciation. The whole point of LMNP réel was precisely that: accumulating a stock during loss-making years and using it later. Without that, the scheme loses a large part of its appeal.

The €7,000 cap per tax household is also very impactful for those with multiple properties. With two LMNP properties at €200k each, you quickly exceed this overall cap.

It should be noted that nothing has been voted on, and the text in Parliament can change significantly. We saw this with micro-BIC in 2024. But the underlying trend is clear, and combined with the 2025 capital gains reform, LMNP réel is shrinking dramatically.

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Hello,

If I understand correctly, depreciation would now be capped at 2.5% per year, meaning a depreciation period of 40 years, and this would apply to both the property’s components (roof, walls, fixtures, etc.) and furniture (bed, sofa, table, chairs, etc.) as well as major works exceeding €500 (facade, window/shutter replacement, boiler repair or modernization, etc.).

With a 40-year period applied across all these elements, it will therefore take much longer to reach the annual depreciation ceiling of €7,000.

On the other hand, expenses under €500 could still be recorded directly as charges. I can already see some clever individuals asking their contractor to issue multiple invoices in order to artificially split the cost of certain works and have them classified as deductible expenses.

This reform therefore risks being circumvented once again. It would have been more consistent to apply the same treatment to charges and depreciation, with uniform handling of expenses rather than creating a threshold that encourages invoice splitting.

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Hello, I own a rental property purchased 2 years ago under LMNP (Non-Professional Furnished Rental), completely renovated with taste. I rent it long-term to help people find housing. And in return, we get strange laws and taxes from a government that just wants to take everything from us…

I think that eventually there will be no more rental properties available—it’s going to become unbearable for landlords… how can we be governed by such incompetent people for so long?

3 Likes
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@Ezerian the wording of the PLF refers to depreciation « of premises, » which presumably targets the building itself, not the furniture. So furniture should remain on its usual lifespans (5-10 years depending on the items). But the overall ceiling of €7k per tax household applies to everything, so with multiple assets you still hit the limit quickly.

Regarding invoices split under €500, yes it’s obvious that’s going to proliferate. This type of workaround generally ends up being patched, either in the final law or through administrative guidance.

I’m waiting for the final text anyway. These PLFs change quite a bit between submission and the final vote.

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Hello,
Thank you for the topic and summary. If I understand correctly, service residences (student, elderly), are not affected by this 2027 finance bill.

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I know that service residences were not impacted by the Finance Bill that aimed to reintegrate depreciation into capital gains.

We’ll have to see if these residences will also be excluded from this Finance Bill. The sector is already in crisis with many operators going bankrupt, it would be surprising to worsen the situation, it’s a sector that employs :thinking: