Real estate: is making a rental investment always interesting?

While the government intends to reduce the tax advantage of furnished rentals in the 2027 budget, is investing in rental real estate in France still a solution to capitalize or buy for the first time? If it is impossible for you to buy your main residence, or if you want to supplement your income or your retirement, rental investment can be a solution.

For a long time, this segment flourished on the market, because it was supported by a number of tax measures: the Scellier, the Pinel, now extinct... But also, since 1949, the LMNP status (non-professional furnished rental), used by a quarter of landlords in France.

The latter consists of renting out an already furnished property, in return for tax depreciation and a VAT exemption. A significant advantage and so popular that it has even created an “imbalance” in the rental market: now, furnished accommodation is much more numerous than unfurnished properties and it is “urgent”, according to the executive, to rehabilitate the latter – while making savings.

The executive therefore proposes to reduce the tax base in the 2027 budget, currently being debated in the National Assembly. Concretely, he wants to assign from next year to new owners of furnished accommodation a fixed annual depreciation ceiling of 2.5% of the value of the property (it is currently defined on a case-by-case basis).

“The government is attacking one of the last tax systems that works,” regrets David Regin, deputy general director of the Consultim group, which sells real estate investment products. However, he specifies that in a period of rising interest rates, as we are currently experiencing, this weakening would be “less severely felt” by new owners than when rates are low.

Machine-translated from French