The landlord declaring their rents in France faces a stack of levies with rates that differ according to the nature of the rental. Property income or BIC, micro or real, variable rate social contributions: each tax arbitration modifies the net yield sometimes radically.
Differentiated social contributions: the hidden cost of furnished rentals
We observe that most landlords still reason with a single rate of social contributions. The reality is more nuanced. Unfurnished rentals bear 17.2% of social contributions, while non-professional furnished rentals (LMNP) are subject to a rate of 18.6%.
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This gap of 1.4 points seems marginal in percentage terms. On an annual taxable income of several thousand euros, the cumulative difference over the holding period significantly impacts the net yield. A landlord comparing unfurnished and furnished rentals without incorporating this data skews their profitability calculation from the outset.
To delve deeper into the taxation of rents in France, one must therefore reason in terms of effective overall rates, including social contributions, and not just marginal tax brackets.
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Unclassified micro-BIC furnished rentals: a significant drop in allowances
The micro-BIC regime has long been the flagship argument for unclassified furnished rentals, with a comfortable allowance. In 2025, the allowance for unclassified furnished rentals is reduced to 30%, compared to a much higher rate previously. Classified furnished rentals retain a higher allowance, but the distinction between classified and unclassified becomes a determining tax criterion.
This evolution changes the game for landlords renting out a furnished studio without tourist classification, thinking they benefit from a favorable regime. With the allowance reduced to 30%, the micro-BIC for unclassified furnished rentals aligns with the micro-property of unfurnished rentals in terms of flat-rate deduction.
When the real regime takes the advantage
As soon as actual expenses exceed the flat-rate allowance, the real regime applies. In furnished rentals, the ability to depreciate the property and furniture allows for a significant reduction in the taxable base, sometimes neutralizing it for several years.
We recommend simulating both regimes each year, as a change in situation (end of a loan, completion of work) can reverse the interest from one regime to another.
Real estate regime: deductible expenses that make the difference
In unfurnished rentals, the real regime allows for the deduction of all actual expenses incurred. The list is broader than what many landlords exploit:
- Loan interest and borrower insurance costs related to the mortgage of the rented property
- Property tax (excluding the garbage collection tax recoverable from the tenant)
- Renovation, repair, and maintenance work, provided they do not constitute a reconstruction
- Property management fees, including agency fees and unpaid rent insurance premiums
- Non-recoverable co-ownership charges
A property deficit generated by these deductions can be offset against global income within the limits set by law, with any surplus carried forward to the property income of subsequent years. This mechanism makes the real regime particularly relevant in years of major renovations.
The trap of late declaration in the real regime
The choice of the real regime commits the landlord for a minimum period. Returning to the micro-property before the end of this commitment is not possible. A landlord who opts for the real regime only in the year of their renovations, thinking they can return to the micro-property the following year, finds themselves stuck.
Unknown exemptions: renting out a primary residence
Some rental income is completely exempt from tax under strict conditions. Renting out part of the primary residence as furnished is exempt if the rent remains within reasonable limits set by the administration. These ceilings are published annually and vary by geographical area.
Another case of exemption: guest rooms whose annual income does not exceed 760 euros including tax. This exemption, expressly provided until December 31, 2026, concerns individuals who occasionally host. Below 760 euros including tax, no rent needs to be declared for this activity.
Arbitrating between unfurnished and furnished rentals: a tax decision grid
The choice between unfurnished and furnished is not just about comparing two allowances. Several parameters come into play simultaneously:
- The rate of social contributions (17.2% for unfurnished versus 18.6% for non-professional furnished)
- The level of applicable micro allowance (30% in micro-property as in unclassified micro-BIC)
- The ability to depreciate the property in the real furnished regime, absent in unfurnished rentals
- The possibility of generating a property deficit offsettable against global income in unfurnished rentals, a mechanism nonexistent in furnished rentals
A landlord who owns a recent property with no planned renovations often benefits more from depreciation in the real furnished regime. Conversely, a landlord planning heavy renovations has an interest in remaining unfurnished to exploit the property deficit.
The optimal tax regime depends on the life cycle of the property, not on a universal rule. Simulating each scenario with the actual expenses of the current year remains the only reliable method for arbitration.