Declaring your rental income in 2026: the complete guide

Do you receive rental income and wonder how to declare it correctly? The answer depends on a single initial parameter: do you rent unfurnished or furnished? This choice determines the tax category of your income, the applicable taxation scheme and, ultimately, the amount of tax you will pay. You might as well understand the mechanics before filling out your tax return.

This guide gives you a clear and practical breakdown of the taxation of rental income in 2026 — with up-to-date figures, calculation formulas and pitfalls to avoid.

The first distinction: unfurnished rental or furnished rental

Everything starts from there. Depending on the nature of your rental, your income does not fall into the same tax category — and the rules of the game change completely.

This distinction is not insignificant: property income and BIC do not offer the same deduction levers. Furnished rentals notably open up the possibility of depreciating the property and the furniture in the accounts — a tax advantage that unfurnished rentals cannot replicate.

Unfurnished rental: micro-foncier or actual regime?

If you rent your property without furniture as the tenant's primary residence, your rent constitutes property income (revenus fonciers). Two regimes apply depending on the annual amount of your revenue.

The micro-foncier: the simplified declaration

The micro-foncier regime applies automatically if your annual rents do not exceed €15,000. The tax administration applies a flat-rate allowance of 30% on your gross revenue. You do not have to justify any expenses — but you cannot deduct any either.

Example: you receive €10,000 in annual rent. The 30% allowance reduces your taxable income to €7,000. If your TMI (marginal tax rate) is 30%, your tax will be: (€7,000 × 30%) + (€7,000 × 17.2%) = €3,304.

This regime is suitable if your actual expenses are low and you prefer administrative simplicity. As soon as your actual expenses exceed 30% of your revenue, the actual regime (régime réel) becomes more advantageous.

The actual property regime: deducting actual expenses

Under the actual regime (régime réel), you deduct all of your actual expenses from your gross property income: maintenance and repair work, loan interest, property tax, rental management fees, insurance, co-ownership charges.

If the total of these expenses exceeds your revenue, you are in a property deficit (déficit foncier). This deficit can be offset against your overall income up to a limit of €10,700 per year — provided it comes from expenses other than loan interest. The portion related to loan interest can only be offset against your property income for the following ten years.

Key point: the property deficit is one of the few mechanisms that allows you to directly reduce your overall taxable income — and therefore your tax on all of your income, not just on your rents. It is a powerful tax exemption lever for owners who carry out major renovations.

Furnished rental (LMNP): micro-BIC or actual regime?

Income from a furnished rental falls under the BIC (Industrial and Commercial Profits). Two regimes coexist here as well, with terms and ceilings updated by the Le Meur law of November 2024.

The micro-BIC ceilings in force in 2026

⚠️ Le Meur law change (November 2024): the allowance for classified tourist accommodation fell from 71% to 50%, and their ceiling was set at €77,700. For unclassified rentals, the allowance fell to 30% with a ceiling lowered to €15,000. These changes make the micro-BIC significantly less attractive for unclassified Airbnb rentals.

The advantage of the micro-BIC over the micro-foncier remains real for long-term furnished rentals: a 50% allowance compared to 30% for unfurnished rentals — with equivalent revenue, your taxable income base is twice as light.

The actual BIC regime: the depreciation lever

This is the most powerful regime tax-wise, accessible on option or mandatory if your revenue exceeds the ceilings. It allows you to deduct all actual charges and to depreciate your property and your furniture in the accounts.

Depreciation works as follows:

• The real estate property is depreciated over 40 to 50 years (excluding non-depreciable land)

• The furniture and equipment are depreciated over 5 to 10 years (for any item with a value greater than €600 incl. tax)

These depreciation allowances reduce your taxable income every year — without you paying out any cash. In practice, many LMNP owners on the actual regime report a taxable base of virtually zero for 5 to 15 years, depending on the purchase price of the property and the remaining balance of their mortgage.

💡 Good to know: if your charges and depreciation exceed your revenue, you generate a BIC deficit that can be carried forward to your furnished income for the next 10 years. Unlike the property deficit, this deficit cannot be offset against your overall income — but it completely neutralizes your rental taxation over time.

How is the tax on your rental income calculated?

Regardless of the regime, your net taxable rental income is added to your household's overall income and is subject to the progressive income tax scale.

The calculation formula is as follows:

Tax = (Net Income × TMI) + (Net Income × 17.2%)

The TMI (Marginal Tax Rate) corresponds to the highest bracket of your income. The brackets in force are: 0%, 11%, 30%, 41%, and 45%.

The social security contributions of 17.2% (CSG, CRDS, solidarity tax) are systematically added to the income tax — this is an item that many owners forget in their profitability calculation.

Concrete example — micro-foncier, TMI at 30%:

Since withholding tax was introduced, the tax on your property income is collected monthly in the form of an instalment debited directly from your bank account — in addition to the automatic deduction from your salary or pension.

Also read: LMNP - the complete guide to Non-Professional Furnished Landlord status

Top 7 tax traps of furnished rentals

How to concretely declare your rental income?

The procedure varies depending on your regime. Here is a practical summary.

Under the actual BIC regime, the 2031-SD tax return is a complete declaration including a balance sheet, income statement, and appendices. It is this return that formalizes depreciation and deficits. The result is then transferred to your personal income tax return.

⚠️ Hiring a chartered accountant is highly recommended for the actual BIC regime. The calculation of depreciation — particularly the breakdown between building structure, facades, roof, equipment, and furniture — is technically complex, and an error can be costly in the event of an audit. Their fees are fully deductible from your expenses.

A quick summary of the regimes

What many Parisian owners miss

Rental taxation is often endured rather than managed. The most common mistakes: remaining under the micro-foncier or micro-BIC by default without ever simulating the actual regime, not anticipating social security contributions in the profitability calculation, or not declaring rental income at all — a situation that exposes you to tax adjustments on unprescribed years.

In Paris, where property values are high and potential depreciation is very significant, switching to the actual BIC regime under LMNP status often represents a considerable tax saving over time. It is a decision that deserves a serious simulation with a professional before being finalized.

Would you like to optimize the taxation of your Parisian rental property?

BAUVAUT supports property owners in Paris and the inner suburbs with renting out and managing their properties — short-term, mobility lease, Civil Code lease or long-term rental. We guide you toward the professionals suited to your tax situation and take care of all rental procedures. Contact us for a free initial consultation.