Non-professional furnished rentals are in the government’s sights. It is more fiscally advantageous to rent a furnished property rather than renting it bare today, which is what the government wants to remedy. The draft finance law (PLF) for 2025, presented to the Council of Ministers on Thursday, aims to increase taxation in the event of the sale of accommodation rented as non-professional furnished accommodation (LMNP). Currently, when you rent accommodation with this status, you benefit from what is called depreciation which allows each year rental companies to deduct part of the loss in value of the accommodation, the work undertaken, or even the furniture, and this depreciation is not taken into account in the calculation of the capital gain when the property is resold. A double gain therefore which could be eliminated. Partly anyway. The finance bill plans to reintegrate depreciation into the calculation of the capital gain in the event of sale of the property.
For example, if you buy a property for 100,000 euros and you sell it for 200,000 euros, and the value depreciated for tax purposes during the rental is 20,000 euros, the amount of the taxable capital gain is 100,000 euros (sale price – purchase price) today. If the PLF is adopted, the depreciated value will be added so the taxable capital gain will be 120,000 euros and no longer 100,000 euros. “What interest remains in investing in furnished rentals, with the associated risks and charges, if taxation for all types of rentals is standardized according to the current rules for taxing property income, very slightly improved, and if depreciation non-land property is deleted?», worries Alexis Alban, president of Lodgis, a network specializing in traditional furnished rentals in France.
A measure that will seize up the rental market?
However, the consequences of this measure must be put into perspective for Baptiste Bochart, lawyer at Jedéclaremonmeublé.com. “The only consequence of this measure: non-professional furnished rental companies will see a difference at the time of sale but not on a daily basis. Some rental companies do not sell their property but instead donate it or pass it on to their child during an inheritance, so the sale of the property does not necessarily take place.he nuances. There is no point in sounding the alarm for the moment, because the measure, if it were to apply as it stands, would in reality have little effect for many rental companies..” Likewise, for those who sell their property after 22 years of ownership, an exemption from capital gains tax applies (the capital gains base benefits from a reduction each year from the 6th year of detention), so the measure will have no impact. According to Baptiste Bochart, the only ones who could be affected are those who have a buy-sell strategy and keep their goods for a short time.
«However, when purchasing the property, they can opt for a deduction of notary fees and agency commissions as expenses and not as depreciation, which may allow them to reduce the amount of depreciation deducted in the first years, and therefore to minimize the impact of such a measure“. What would happen in the event of a loss in value on resale, if the loss is less than the depreciation? According to Alexis Alban, there will be no double punishment. The owner is already doing a bad deal so we cannot add another punishment in a context where he is losing money. “If the sale generates a loss in value despite the inclusion in the calculation of depreciation, then the owner does not paycapital gains taxes “, he declares. To see if the government decides otherwise.
«The objective can be understood. In a way, it’s worth asking the question: how come there is no depreciation tax anywhere? But you have to think in the context of a housing shortage. We must see how to pass this measure without penalizing the rental housing market. The turnover is greater in furnished rentals than in bare rentals. Every year we put housing back on the rental market so we respond to the shortage of housing in large cities in the old ones. This measure will seize up the market», concludes Alexis Alban. It remains to be seen whether the finance bill will be adopted as is.
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