Are you wondering how lmnp depreciation affects the taxation of your rental investment today and at resale?
Do you want to know whether it is still relevant to depreciate a property under lmnp after recent reforms and in light of the 2026 finance bill?
This guide clearly explains how lmnp depreciation is calculated, its principles, and the step-by-step method for establishing a reliable depreciable base.
We detail the distinction between lmnp depreciation for the building and for furniture, then present numerical case studies and a tax simulation.
Finally, we address the reintegration of depreciation (2025 finance bill) and key points to watch as the 2026 finance bill approaches.
Contact your local real estate advisor for a personalized assessment and to be connected with an accountant who will finalize your simulations.
Understanding lmnp depreciation: definitions and principles
Lmnp depreciation is an accounting entry that spreads the acquisition cost of a property (excluding land) and furniture over several years. This non-cash expense reduces taxable income under the lmnp real tax regime.
Its purpose is to gradually align the accounting value of the property with its use and wear, while optimizing current taxation. Land is not depreciable and must be excluded at purchase.
A distinction is made between property depreciation (building) and furniture depreciation (furniture, appliances). Typical durations are of the same order: building 25–40 years; furniture 5–10 years. Depreciation is most often linear.
The depreciable base results from the acquisition value increased by acquisition costs and qualifying works, minus the non-depreciable land portion. Allocation by component (building, land, furniture, works, acquisition costs) is essential.
Under the real tax regime, appropriate accounting is required: tax return 2031, fixed asset register, and depreciation schedule. Using an accountant experienced in lmnp is recommended to avoid practical errors.
Attention must be paid to the rule stemming from article 39C: depreciation must not create an artificial deficit. The tax authorities monitor the consistency of durations and the existence of supporting documents.
What is lmnp depreciation: property vs furniture?
The building is characterized by slow wear. Depreciation periods generally range from 25 to 40 years, depending on the condition and nature of the property.
Furniture and appliances depreciate faster, with typical periods of 5 to 10 years. Low-value items may be treated as expenses rather than fixed assets.
Works are treated according to their nature: major works (renovation, restructuring) are often depreciable, while routine maintenance is deductible as expenses. Notary and transaction fees may be included in the acquisition cost, prorated to depreciable components.
Example of allocation: for a €250,000 purchase, a common split is 85% building and 15% land, with €5,000 of depreciable furniture. This allocation determines the depreciable base and annual depreciation.
Lmnp depreciation: basic notions (acquisition value, depreciable base, limits)
Base calculation: depreciable base = purchase price + acquisition costs (notary, agency) + qualifying works – non-depreciable land portion. The acquisition value includes all costs directly related to the purchase.
Why isolate land: land does not depreciate and is therefore not depreciable. Estimating the land portion relies on the notarial deed, local assessments, or commonly accepted allocations (for example 15%).
Limits and vigilance: tax authorities require reasonable durations and proper documentation (purchase invoices, quotes, work invoices). Excessive practices may lead to tax reassessment and reintegration of disputed depreciation.
Step-by-step method to calculate lmnp depreciation
Here is a practical five-step method to establish a reliable lmnp depreciation calculation under the real regime.
Allocate the price by separating the building portion from the land portion.
Establish the depreciable base: building price plus notary and agency fees plus qualifying works.
Choose durations for each component (building, furniture, major works).
Calculate annual linear depreciation: depreciable base divided by duration, with prorata temporis for the first year if applicable.
Record and retain all entries in the accounts and keep the depreciation schedule up to date with supporting documents.
Simple formula: annual depreciation = depreciable base ÷ duration (years). For the first year, apply prorata temporis based on the rental start date.
Tools such as an Excel or CSV table listing components, bases, durations, and annual depreciation facilitate monitoring and transmission to the accountant for the 2031 return.
Linear depreciation calculation: numerical example (property and furniture)
Assumption: purchase €300,000; land portion 15% = €45,000; building €255,000. Fees (notary and agency) €15,000. Works €10,000. Furniture €6,000.
Depreciable base for the building = €255,000 + €15,000 + €10,000 = €280,000. Over 30 years, building depreciation = €9,333 per year.
Furniture depreciation = €6,000 ÷ 7 years = €857 per year. Total annual depreciation ≈ €10,190.
Tax impact: if annual rents are €18,000 and charges excluding depreciation are €6,000, income before depreciation is €12,000. After €10,190 of depreciation, taxable income is approximately €1,810. Depreciation significantly reduces current taxation and can improve cash flow.
Caution: ensure depreciation does not create an artificial deficit under article 39C.
Limits and formulas: maximum deductible depreciation (article 39C rule)
Under article 39C of the tax code, depreciation must not generate an artificial deficit. In practice, the maximum deductible depreciation is often calculated as rents received minus actual charges excluding depreciation.
If depreciation exceeds this limit, the portion creating a deficit is not deductible against global income. It may, however, be carried forward and offset against future profits from the same lmnp activity.
Practical advice: track rents and charges annually to calculate the maximum deductible depreciation and avoid contestable positions. When in doubt, seek validation from your accountant.
Tax regimes: real lmnp regime vs micro-bic and consequences
Lmnp offers two tax regimes: micro-bic and the real regime. The choice determines whether depreciation is possible and the level of reporting obligations.
Micro-bic offers administrative simplicity with a flat-rate allowance. There is no depreciation schedule or detailed accounting. Revenue ceilings apply depending on the type of rental.
The real regime requires full accounting and allows deduction of actual expenses and linear depreciation. It often optimizes taxation when charges are high.
The choice between micro and real depends on whether actual charges exceed the micro-bic allowance. A tax simulation is essential before opting.
Micro-bic and depreciation: what does the flat-rate allowance change?
Under micro-bic, the flat-rate allowance is deemed to include depreciation. No actual depreciation is recorded.
The advantage is simplicity, while the drawback is the inability to use real depreciation to offset taxation when charges are significant.
Recent reforms have adjusted certain allowances and ceilings, reducing the attractiveness of micro-bic for some furnished rentals.
When is the real regime relevant to depreciate under lmnp?
The real regime is preferable if actual charges exceed the micro-bic allowance, if major works are planned, or if you want to smooth taxation via depreciation to strengthen cash flow.
Criteria include significant loan interest, high acquisition costs, deductible works, regular co-ownership charges, insurance, and management fees. Holding period and wealth strategy also matter.
A tax simulation with an accountant and discussion with a local real estate advisor are recommended before choosing.
Reintegration of depreciation and impact on capital gains (2025–2026)
Since the 2025 finance bill, depreciation claimed under lmnp may be reintegrated into the capital gains tax base upon sale in certain cases.
Mechanism: capital gain may be calculated as sale price minus acquisition price adjusted for reintegrated depreciation. The reintegrated portion is subject to income tax and social contributions, subject to applicable abatements.
Holding period abatements still apply, with income tax exemption after 22 years and social contribution exemption after 30 years. These reduce the impact for long-term holdings.
As reintegration can increase taxable capital gains, it is essential to anticipate resale effects in any tax simulation.
How is capital gain calculated with reintegrated depreciation?
Steps include determining the sale price, reconstructing the adjusted acquisition price, calculating gross capital gain, applying holding period abatements, and calculating taxes on the taxable portion.
While reintegration increases the taxable base, long holding periods often mitigate the real impact.
Numerical examples: resale before and after reforms
In a scenario without reintegration, capital gain is calculated on the difference between purchase and sale prices. After reform, reintegrated depreciation increases the taxable gain, leading to additional taxation.
The impact is more significant for heavily depreciated properties sold in the short or medium term, while long-term holdings benefit from abatements.
Exceptions and specific cases: serviced residences
Serviced residences may benefit, under certain conditions, from specific treatment where depreciation is not reintegrated at resale.
These cases require careful contractual and tax analysis and verification of eligibility.
Accounting, documentation, and audit risks
Under the real regime, full accounting is mandatory. All supporting documents must be retained and available in case of audit.
Documents to keep include purchase invoices, notary fees, work invoices, furniture invoices, bank statements, rent receipts, management contracts, and depreciation schedules.
Lack of documentation increases the risk of reassessment. Proper record-keeping and validation by an accountant are key safeguards.
Documents to keep to justify lmnp depreciation
Purchase and agency invoices
Notary fees and acquisition documents
Detailed work invoices
Furniture invoices
Bank statements
Rent receipts and management contracts
Updated depreciation schedule
Centralizing these documents in a secure digital file is recommended.
Tax risks and best practices to avoid reassessment
Common errors include overly short depreciation periods, lack of proper allocation, excessive depreciation, and missing documents.
Best practices involve using reasonable durations, documenting allocations, obtaining accountant validation, and avoiding artificial deficit creation.
Regular audits and updated tax simulations help prevent disputes.
Optimizing lmnp depreciation according to your wealth strategy
A local real estate advisor helps assess rental markets, estimate rents, and choose suitable property types. In coordination with an accountant, they assist in selecting the optimal tax regime, estimating net profitability and cash flow, and anticipating resale impacts.
Summary
Lmnp depreciation is a powerful accounting tool to reduce current taxation by spreading acquisition costs excluding land and furniture over time.
The depreciable base must be correctly calculated by allocating price, costs, and works and excluding land.
Article 39C limits must be respected, with proper documentation retained.
The choice between micro-bic and the real regime depends on charges, holding period, and objectives.
Depreciation reintegration at resale increases taxation in some cases and must be anticipated.
To secure and optimize your lmnp strategy, work with a local real estate advisor and an accountant for tailored simulations and ongoing support.
Faq
How do you calculate lmnp depreciation?
First calculate the depreciable base, allocate by components, and apply linear depreciation based on chosen durations, with prorata temporis if applicable.
Will the lmnp status disappear in 2026?
No confirmed disappearance is planned, but the framework has evolved. Monitoring updates and running simulations remains essential.
Can you switch from the real regime to micro-bic?
Yes, subject to eligibility and option rules, but a simulation is recommended as depreciation benefits are lost under micro-bic.
How is lmnp depreciation declared?
It is declared under the real regime through bics accounting and the 2031 tax return, usually finalized with an accountant.
How long does lmnp depreciation last?
Typically 25–40 years for the building and 5–10 years for furniture, adjusted to the property’s condition.
Can land be depreciated under lmnp?
No, land is not depreciable and must be excluded from the depreciable base.
What documents should be kept in case of audit?
All acquisition, work, furniture, financial, and rental documents, as well as depreciation schedules, for at least 10 years.
Does para-hotel activity and vat affect lmnp depreciation?
Yes, offering multiple hotel-type services may trigger vat and specific accounting treatment. Verification with an expert is recommended.
Author :
Fabrice DOBROWOLSKI - Optimhome Network Development Director
Optimhome offers you personalized support for your real estate project. Benefit from all my advice, based on several years of experience, to ensure the success of your project.
