The income derived from a rental property is subject to income tax and social contributions. Depending on whether the property is rented unfurnished or furnished, the applicable tax regime, deductions, and reporting obligations differ. The taxation of rents in France is based on mechanisms that seem simple on the surface, but become more complex as a landlord accumulates multiple types of properties or changes the use of a property during the year.
Change of use during the year: the tax trap that landlords underestimate
A property owner who converts an unfurnished rental into a furnished rental in the middle of the year faces a double reporting obligation. The rents received before the change fall under the category of property income. Those collected afterward switch to the category of industrial and commercial profits (BIC).
This coexistence of two tax regimes on the same property, for the same year, requires the submission of two separate declarations. The period of unfurnished rental is reported using the form dedicated to property income, while the furnished period requires a separate BIC declaration.
The difficulty does not stop there. The change of use also triggers a reporting obligation for occupancy with the tax administration, via the “Real Estate” service on impots.gouv.fr. The landlord must report the change in the nature of the property’s occupation. A failure to do so can lead to inconsistencies between the reported data and the chosen tax regime.
For landlords who wish to understand the taxation of rents in its entirety, this situation illustrates how rental taxation goes beyond the simple choice between micro and real.
The issue of VAT adds an additional layer. The unfurnished rental of a property is generally exempt from VAT. In contrast, the rental of furnished or adapted premises for professional use may be subject to it. A landlord managing both an unfurnished apartment and a furnished commercial space must treat each property according to distinct VAT rules.
Property income from unfurnished rentals: micro-property or real regime
For an unfurnished rental property, the rents received are taxed at the progressive income tax scale, in the category of property income. They are also subject to social contributions at a rate of 17.2%.
The micro-property regime applies automatically when the household’s annual gross rents remain below 15,000 euros, provided that the properties do not benefit from any special arrangements (such as depreciation or specific deductions). The administration then applies a flat-rate deduction of 30% on the declared rents. No actual expenses can be deducted in return.
The real regime applies beyond this threshold, or at the landlord’s option. It allows for the deduction of actual expenses incurred:
- Maintenance, repair, and improvement work on the property, provided they do not constitute a reconstruction
- Loan interest related to the acquisition or work on the rented property
- Insurance premiums, property tax, management fees, and non-recoverable condominium charges
When the deductible expenses exceed the rents received, the landlord incurs a property deficit that can be offset against global income up to a limit of 10,700 euros per year. The surplus can be carried forward to the property income of the following ten years.
A point often overlooked: a landlord who owns two unfurnished rental properties cannot declare one under the micro-property regime and the other under the real regime. The chosen regime applies to all property income of the household, with no possibility of splitting.
Taxation of rents in furnished rentals: the BIC framework
The rents from a furnished property are taxed in the BIC category, not as property income. This distinction significantly changes the tax mechanics.
The micro-BIC regime offers a flat-rate deduction on gross receipts. For traditional furnished rentals, this deduction is higher than that of the micro-property regime, which partly explains the appeal of furnished rentals for landlords looking to reduce their taxable base.
Under the real BIC regime, the landlord can deduct their actual expenses but also, and this is the major difference, depreciate the value of the property and the furniture. Depreciation allows for a significant portion of rental income to be absorbed without cash outflow.
The status of non-professional furnished rental (LMNP) remains the most common framework. The conditions to qualify as a professional landlord (LMP) involve exceeding certain revenue thresholds and that the furnished rental activity represents the primary source of income for the household.
The status of private landlord: a recent provision
Since February 2026, a new regime called “private landlord” has come into effect. This provision treats rents as property income with a VAT exemption under certain conditions. Initial feedback on the ground varies regarding the actual simplicity of its application, particularly for landlords managing multiple properties under different regimes.
Social contributions and deductible CSG: what remains after tax
Beyond income tax, rental income is subject to social contributions. These contributions apply to both property income and BIC from furnished rentals.
A portion of the CSG paid on property income is deductible from the global income of the following year. This mechanism slightly reduces the effective tax burden, but it only applies to income subject to the progressive scale, not to income subject to the flat-rate withholding.
- Net property income is subject to social contributions after applying the micro-property deduction or deducting actual expenses
- In furnished rentals under the micro-BIC, social contributions apply after the flat-rate deduction
- Under the real BIC regime, the base subject to social contributions takes into account the deducted expenses but not the depreciation in certain cases
The combination of the marginal tax rate and social contributions can lead to the total tax burden on rents being well beyond half of net income for taxpayers in the higher brackets. The choice of tax regime and type of rental is not trivial: it directly determines the net return after tax of a rental investment.
The taxation of rents in France is not limited to ticking a box between micro and real. The type of lease, the nature of the property, the reporting obligations related to occupancy, and the VAT rules form a set that each landlord must articulate according to their own situation, especially when it evolves during the year.