Furnished Rental and Budget 2027 : what the tax reform provides

As of 2 October 2026, these provisions have not yet been passed. The Budget bill 2027filed on October 1st at the National Assembly must follow its parliamentary course. Its content may therefore evolve before final adoption.

What changes are envisaged? Why does depreciation play such an important role in LMNP ? And what factors should investors examine to understand the possible consequences of this reform?

Why does LMNP allow for a reduction in tax on rental income?

Income from furnished rentals falls under industrial and commercial profits, BIC. Their tax treatment depends on the applicable tax regime.

Under the micro-BICregime, the owner benefits from a flat-rate allowance representative of expenses. They do not separately deduct their expenses or depreciation.

Under the actual regime, they may deduct tax-allowed expenses and apply depreciation to the depreciable elements of the property and its furniture. Land is not depreciable. This accounting charge allows the investment cost to be spread over several years without corresponding to a new cash outflow each year.

The combination of expenses and depreciation can reduce the taxable result to zero. This mechanism explains the appeal of the actual regime for many investors.

However, the LMNP status does not guarantee the absence of tax. The result depends on the rents collected, deductible expenses, and usable depreciation. Their deduction cannot create or increase a deficit.

Budget 2027 : a dual cap on depreciation

Article 7 of the bill plans to limit the depreciation of LMNP properties to 2,5 % per year, with a maximum of 7 000 euros per year per tax household.

For furnished tourist rentals, the limits would be lower: 1,5 % per year and 5 000 euros per tax household. Certain residences and some facilities, notably those accommodating students, elderly or disabled persons, would benefit from exceptions to the cap.

Why does the cap per tax household matter so much?

A cap applied per tax household requires considering the entirety of the rental assets concerned.

An investor owning multiple properties must therefore examine their overall deductions. A simulation limited to one apartment might give an incomplete view of their situation.

The effect would also differ according to the current level of depreciation practiced. An owner whose deduction remains below the new limits might be less affected than a landlord using significant depreciation to offset their profit.

The end of carryforward of new undeducted depreciation

The project also plans to eliminate the carryforward of undeducted depreciation for fiscal years ending from January 1st 2027.

For prior carryforwards, a transitional period would be granted until 31 December 2036, with usage limited to half of the taxable income, after applying the new rules.

Currently, deferred depreciation can be carried forward indefinitely, subject to the applicable conditions of the activity. They thus represent a reserve that may reduce profits in subsequent years.

This reserve can grow over time. When interest expenses decrease, charges drop and the result before depreciation can increase. The owner must therefore look beyond their next tax return: the taxation of an investment is assessed over several years.

What possible consequences on rental profitability?

A reduction in deductions can increase taxable profit, even when rents and expenses remain the same.

Let us take an educational example, independent of the precise calculation of future caps:

Annual elements	Initial situation	Reduced deduction hypothesis
Rental income	12 000 €	12 000 €
Deductible expenses	4 000 €	4 000 €
Depreciation actually deducted	8 000 €	5 000 €
Taxable income	0 €	3 000 €

In this hypothesis, the owner retains the same income but must now include a profit of 3 000 euros in their tax calculation. This is a taxable base, not the amount of tax to be paid.

The gross yield of the property would remain the same. However, its net yield after taxation could decrease. This is why a profitability study must distinguish between income received, expenses, financing repayments, and taxes.

A reform distinct from that of real estate capital gains

The Budget topic 2027 must not be confused with the change already made at resale.

For sales made since 15 February 2025amortizations applied under the actual regime must be reintegrated into the capital gain calculation according to applicable rules. This tightening results from the finance law for 2025.

Both topics concern different stages of the investment: the collection of rents and the exit from the assets.

To assess an operation, one must therefore examine its annual performance, but also its holding period and resale conditions. A tax saving during the rental period alone is not enough to measure overall performance.

What points should be checked when owning a property under LMNP?

Preparing a simulation begins with reliable data. The owner can gather with their accountant:

• the amount of annual rental income;
• the actually deductible expenses;
• the breakdown of amortizations for the property and furniture;
• the inventory of amortizations whose deduction was deferred;
• the forecasted evolution of loan interest;
• their holding period and any potential sale plans.

The objective is to compare several scenarios: the current operation, a reduced deduction, and an evolution of rents or expenses.

For a new purchase, this approach also allows verifying the strength of the operation when its tax advantage decreases. The purchase price, rental demand, vacancy, renovations, and financing remain crucial.

Should one sell or switch to unfurnished rental?

A budget announcement alone does not justify a real estate divestment decision.

Selling incurs its own costs and tax consequences. Switching to unfurnished rental also requires examining the lease, feasible rent level, expenses, and applicable tax regime.

The decision therefore depends on the property and the owner. A quantified comparison is more useful than a general conclusion about the disappearance of interest in furnished rental.

At this stage, LMNP continues to exist. The project aims to reduce certain advantages of the actual regime. The final version of the law will be decisive in accurately recalculating the profitability of the investments concerned.

Review your investment with a professional

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FAQ: LMNP and Budget 2027

Has the LMNP reform already been passed?

No. As of 2 October 2026, the provisions mentioned concerning the status of non-professional furnished rental (LMNP) are part of the draft finance bill for 2027 . They may still be amended, supplemented, or deleted during parliamentary review. Only the final adopted text will reveal the new applicable rules.

Do all furnished rental lessors currently pay zero tax?

No. The taxation of a furnished rental depends notably on the chosen tax regime and the taxpayer's situation. Under the actual regime, deductible expenses and depreciation can significantly reduce the taxable income, sometimes down to zero. However, the absence of tax on rental income is never automatic.

Does the envisaged ceiling for LMNP apply to each property?

The annual ceilings currently envisaged in the draft Budget 2027 are expressed in euros per tax household and not per property. Taxpayers owning multiple furnished rental properties must therefore consider their entire activity to assess the possible consequences of the reform.

How to follow the evolution of the LMNP reform in the Budget 2027 ?

The legislative file published by the National Assembly allows following the draft finance bill for 2027, its different stages of examination as well as the amendments and modifications adopted by parliamentarians. To know the rules that will actually come into force, one must refer to the final adopted and published text.

Sources and monitoring of the reform

• Draft finance bill for 2027 — article 7, pages 49 and 50.
• Legislative file of the Budget 2027 — National Assembly.
• Furnished rental: tax regimes — impots.gouv.fr.
• Sale of a furnished property: calculation of capital gain — impots.gouv.fr.

Article updated on 2 October 2026. The provisions relating to the Budget 2027 are presented subject to their definitive adoption.