LMNP real-cost regime: all past depreciation will be taxed on resale — including years before 2025

LMNP real-cost regime: all past depreciation will be taxed on resale — including years before 2025

The ministerial response of 24 March 2026 has settled a crucial debate for thousands of LMNP (non-professional furnished rental) investors using the real-cost tax regime. Not only will depreciation deducted from 1 January 2025 onwards be added back into the calculation of taxable capital gains upon resale — all depreciation claimed since the property was first acquired will be too, regardless of the year in which it was deducted. If you have held a furnished rental for 10 or 15 years and are considering selling, the tax bill could be far heavier than anticipated. Here is what this means concretely for your wealth strategy, and what you can do right now to limit the impact.

1. What the law changed as of 15 February 2025

Before the reform, the LMNP real-cost regime offered a rare double advantage. During the rental period, you could depreciate the property (excluding land value) and deduct those depreciation charges against your rental income, significantly reducing your annual tax liability. And at the point of resale, the capital gain was calculated under the standard private individual rules, with no account taken of depreciation already deducted. Before the Finance Act for 2025, non-professional landlords could depreciate a rented property without those deductions affecting the taxable capital gain on disposal.

Article 84 of the Finance Act for 2025, dated 14 February 2025, aligns the capital gains calculation for LMNP landlords with that applicable to professional furnished rental operators (LMP — loueurs en meublé professionnels). The reform puts an end to this asymmetry: depreciation that has been deducted reduces the acquisition value used to calculate the gross capital gain. In practice, the new formula is as follows: Gross capital gain = Sale price minus (Acquisition price minus Depreciation deducted).

2. The ministerial response of 24 March 2026: an unambiguous verdict

From the moment the reform came into force, a major question divided practitioners: did the recapture rule apply only to depreciation claimed from 2025 onwards, or to all depreciation deducted since the property was acquired? A recent ministerial response published on 24 March 2026 clarifies the scope of the reform. Contrary to the expectations of some practitioners, the depreciation recapture is not limited to amounts claimed since 2025: it also covers prior depreciation (Mette response, question no. 10097, published in the JOAN — Official Journal of the National Assembly — on 24 March 2026).

The regime introduced by the Finance Act for 2025 applies to disposals of real estate completed from the day following its enactment, regardless of when the property was first let. Accordingly, subject to the application of taper relief for length of ownership, all depreciation deducted during the rental period of the disposed property will be taken into account in the capital gains calculation. These clarifications will be included in the official commentary on the reform in the BOFiP (Bulletin officiel des finances publiques — France's official public finance bulletin).

3. A worked example to understand the real impact

The numbers speak for themselves. Consider a property purchased for €200,000, let under the LMNP real-cost regime for 10 years. You have deducted €60,000 in property depreciation. You sell the property for €250,000. Before the reform, with €15,000 in acquisition costs and €30,000 in a standard works allowance, your gross capital gain would have been approximately €5,000. With the recapture of the €60,000 in property depreciation, the gross capital gain rises to €65,000. Capital gains tax (19% income tax + 17.2% social levies, i.e. 36.2% before taper relief) applies to this significantly higher base.

Over ten years of ownership and €60,000 depreciated, the taxable capital gain increases by the same amount. And for an investor who has held the property for 15 or 20 years, the shock comes primarily from the fact that depreciation claimed before 2025 is included in the calculation, since the sale takes place after 15 February 2025. Also worth noting: with depreciation recapture, investors who might have had a net capital gain of €40,000 (below the threshold) could find themselves at €80,000, triggering a surcharge of 6%, i.e. an additional €4,800.

"Selling an LMNP property after years of depreciation deductions without having anticipated the recapture rule means discovering a tax bill multiplied tenfold on the day you sign at the notary's office."

Editorial paraphrase for illustrative purposes

4. What this changes for concierge services and property managers

5. What this changes for property investors: strategies to activate now

The reform does not call into question the long-term value of the LMNP real-cost regime. Depreciation remains advantageous in the vast majority of cases: the annual tax benefit (reduction in taxable rental income) outweighs the additional cost at resale, particularly for long-term holdings of more than 15 years. However, the resale strategy needs to be rethought entirely.

Here are the concrete levers to activate immediately:

Key takeaways: 5 essential points

← Back to blog