LMNP Depreciation: the complete guide to optimizing your taxes in 2026
What is depreciation in LMNP?
An accounting mechanism for tax optimization
Depreciation is an accounting entry that reflects the gradual decline in a property's value over time. In LMNP, it allows you to spread the acquisition cost of the property (excluding land), furniture, and renovations over several years, and to deduct a portion of this cost from your taxable rental income each year.
This expense is considered a non-cash charge: it reduces your taxable income without you having to pay anything out at the time of deduction.
Why does this advantage make all the difference compared to standard property income?
This is what fundamentally distinguishes LMNP under the real regime from standard property income, where this mechanism does not exist. An investor receiving €12,000 in annual rent can see their taxable income reduced to a few hundred euros, or even zero, thanks to the combination of deductible expenses and depreciation, while still collecting the full amount of their rent.
Conditions for depreciating your LMNP property
The actual tax regime, an essential requirement
Depreciation is only possible under the actual tax regime, whether simplified or standard, depending on the level of revenue selected from the tax regimes applicable to furnished rentals. The micro-BIC regime, with its 50% flat-rate deduction (or 30% for non-classified tourist rentals), does not allow for any individualized depreciation: the deduction is intended to cover all expenses, including depreciation.
Opting for the actual regime becomes profitable as soon as expenses and depreciation exceed the flat-rate deduction of the micro-BIC, which is very often the case from the first or second year of ownership.
Reporting obligations to comply with
- Maintaining accounting records and producing a tax return (Cerfa forms 2031 and 2033)
- Preparing a depreciation schedule by component, to be attached each year
- Adhering to the tax calendar: the 2031 tax return is generally due in mid-May
How to calculate LMNP depreciation: the component-based method
Step 1: Determine the depreciable base
The depreciable base corresponds to the acquisition price, including notary and agency fees, plus any capitalizable renovation work, minus the value of the land, which is never depreciable. This land portion is generally estimated at between 10% and 20% of the price depending on the location—higher in dense urban areas—and must be documented from the first tax return.
Example: for a property acquired for €200,000 with €15,000 in acquisition costs, if the land is estimated at 15% of the price (i.e., €30,000), the depreciable base for the building comes to €185,000.
Step 2: Break down the property by components
The General Chart of Accounts requires the property to be broken down into components, each with its own useful life. As a guide, the main structure and shell are generally depreciated over 25 to 50 years, roofing and waterproofing over 20 to 30 years, fixtures and interior fittings (plumbing, electricity) over 10 to 20 years, and furniture and equipment over 5 to 10 years.
These durations are indicative: they vary based on the condition of the property, its construction date, and the usage periods determined by your accountant, in accordance with the standard useful life of rental properties.
Step 3: Apply straight-line depreciation
For each component, simply divide the base amount by the chosen duration to obtain the annual depreciation allowance. The first year is calculated on a pro rata basis, depending on the date the property is made available for rent.
Simplified example, rounded amounts: the structure depreciated at €130,000 over 30 years represents approximately €4,333 per year, the secondary works depreciated at €40,000 over 15 years represent approximately €2,667 per year, and the furniture depreciated at €12,000 over 7 years represents approximately €1,714 per year. The total annual depreciation then reaches approximately €8,700.
For a property generating €12,000 in rent, once other expenses are deducted (loan interest, co-ownership charges, insurance, management fees), this depreciation is very often enough to bring the taxable income close to zero.
Depreciation caps: a rule to know
A deduction that can never create a deficit
Depreciation can never create or increase a deficit. If the calculated amount exceeds the rental income available after other expenses, the unused portion is not lost.
Carrying forward deferred depreciation
This unused portion is carried forward indefinitely as deferred or carry-forward depreciation and can be deducted in subsequent years. This mechanism explains why so many LMNP investors report zero taxable income, without being in a deficit and without losing the benefit of their unused depreciation allowances.
The 2025 reform: reintegrating depreciation into capital gains
What the 2025 Finance Act changes
The Finance Act No. 2025-127 of February 14, 2025 for 2025 amended Article 150 VB of the General Tax Code to introduce a mechanism for reintegrating depreciation into the calculation of capital gains for LMNP properties. The stated objective is to align the tax treatment of non-professional landlords with that of professional landlords, in the name of tax fairness.
Before this reform, depreciation deducted during the rental period had no impact on the capital gains calculation: the acquisition price used remained the historical price, just as it would for an owner who had never depreciated their property. Since February 15, 2025, this is no longer the case: accumulated depreciation now reduces the acquisition value used, which mechanically increases the taxable capital gain.
Who is affected, and as of when?
The measure applies to all sales completed on or after February 15, 2025, regardless of when the property was first rented out. The tax authorities have confirmed that depreciation taken before 2025 is also included in the event of a sale after this date.
Key exceptions to note
- Serviced residences acquired under a commercial lease (student housing, senior living facilities, nursing homes) retain the previous capital gains calculation method, without the recapture of depreciation.
- SCPI shares are also exempt from this mechanism: taxation there is based on distributed income and the capital gain from the sale of shares.
The practical impact on resale taxation
LMNP real estate capital gains remain taxed at 36.2% (19% income tax and 17.2% social charges), with the standard allowances for holding duration: income tax exemption after 22 years, and total exemption (income tax and social charges) after 30 years. What changes is the base to which this rate applies: the longer a property has been depreciated, the greater the difference between the old and new calculation.
Is it still worth using depreciation for LMNP in 2026?
The benefit during the holding period remains intact
The 2025 reform does not eliminate the benefit of depreciation while holding the property. The actual LMNP status remains relevant for reducing the tax on rental income received each year.
Plan your exit strategy now
What has changed is the trade-off between long-term holding, where depreciation remains fully advantageous and holding period allowances gradually neutralize the impact of the reform, and medium-term resale, where the tax difference can be significant. Your exit strategy must now be planned from the moment of acquisition rather than improvised at the time of sale.
Get support from an accountant specializing in LMNP
The risks of poorly managed breakdown
Between component-based breakdown, justifying durations, and capping, LMNP depreciation is a technical mechanism where a methodological error is often paid for several years later, at the time of sale, when it is too late to fix the situation.
The role of Virtus by your side
This is precisely the role of an accountant specializing in furnished rentals: to establish a reliable and documented breakdown, secure your tax return, and, most importantly, simulate the real impact of the 2025 reform on your situation before you decide when and how to sell. The teams at Virtus support LMNP investors with all these matters, from calculating depreciation to divestment strategy.
