LMNP Scheme: Key Takeaways

While investors have been hearing about the “LMNP” scheme—referring to non-professional furnished rentals—for many years, it has recently drawn significant attention due to legislative developments.

Indeed, several changes announced in the 2024 Finance Act, particularly concerning the micro-BIC regime, were followed by the “Le Meur” law of November 19, 2024. The actual taxation regime, for its part, has been significantly impacted by the 2025 Finance Act.

Overview of Applicable Regimes Until 2024

The micro-BIC regime allowed, for income tax purposes:

• A flat-rate deduction of 71% on annual rental income from classified accommodations and guest rooms, provided it was below €188,700.
• A flat-rate deduction of 50% on annual rental income from unclassified accommodations, provided it was below €77,700.

Whenever rental income exceeded these thresholds—or upon express request by the taxpayer—the actual taxation regime would apply.

This regime allows the deduction of actual expenses incurred by the taxpayer (property tax, renovation costs, loan interest, etc.).
Unlike unfurnished rentals, it also allows the deduction of depreciation, which constitutes a significant tax advantage.

The Historical Advantage of Depreciation in LMNP

This depreciation was particularly advantageous because, upon the sale of the property, the capital gain was subject to the capital gains regime applicable to private individuals—without reintegrating the depreciation that had been previously applied (unlike with professional capital gains).

In practical terms, this allowed for reduced taxation on rental income without affecting taxation upon resale.

The New Rules Applicable from 2025

Long seen as a tax loophole, the LMNP scheme has now been reformed.
Starting with the taxation of rental income earned in 2025, the new flat-rate deductions under the micro-BIC regime are:

• 50% for classified short-term rentals and guest rooms, as well as for long-term rentals, provided the income is under €77,700.
• 30% for unclassified short-term rentals, provided the income is under €15,000.

A Major Shift: Integration of Depreciation into Capital Gains

Article 24 of the 2025 Finance Act introduces an important change:
From now on, depreciation deducted during the rental period will reduce the acquisition price when calculating the taxable capital gain upon the resale of the property.

This change brings the LMNP scheme closer to a professional capital gains logic, while maintaining a specific civil framework.

Towards a Reduced but Nuanced Appeal

The attractiveness of the furnished rental scheme has therefore diminished, but this should be put into perspective:

• The changes are more impactful for those previously eligible for the micro-BIC regime, who will now be steered more quickly toward the actual regime.
• For those already under the actual regime, only the capital gains deductions are affected.
• They still retain access to the capital gains regime for private individuals, including the exemption after 30 years of ownership.