The 7 levers to optimize your taxation in furnished rentals

In 2026, furnished rental remains one of the most tax-efficient regimes in the entire French wealth management landscape. But this performance is not triggered automatically: it is built, lever after lever, through a series of technical choices that most owners never make — either due to lack of knowledge or because they have delegated their declaration to a general accountant who has not optimized what could be.

The tax gap between a "by default" landlord and an "optimized" landlord frequently amounts to several thousand euros per year, on the same property and the same rent. Here are the seven levers that make the difference — those we systematically activate for our clients in Paris and the inner suburbs.

1. Choosing the right regime: micro-BIC or actual regime (régime réel)

This is the first and most structuring decision. In long-term furnished rental (tenant's main residence), you have the choice between two regimes:

The tipping rule is simple: if your actual expenses + depreciation exceed 50% of your revenue, the actual regime is more advantageous. For a property financed by a loan, with property tax, co-ownership charges, management fees, and depreciation, the actual regime wins in more than 80% of cases. In Paris, where property tax has risen sharply in recent years, the tipping threshold is reached even faster.

2. Activating depreciation — the most powerful lever of the LMNP

This is the mechanism that makes furnished rental tax-wise unique in France. Under the actual regime, you can write off in accounting terms:

• The real estate property (excluding land, which is about 85 to 90% of the acquisition price), over 25 to 30 years

• Furniture and equipment, over 5 to 10 years

• Improvement works, over their useful life

In concrete terms: for a Parisian apartment purchased for €500,000, of which €450,000 is depreciable over 28 years, you generate approximately €16,000 in annual depreciation — a tax charge that never comes out of your pocket, but which offsets your taxable rental income. Most LMNP owners under the actual regime report a tax result close to zero for the first ten to fifteen years of operation.

⚠️ Attention Point 2026: since the 2025 finance law, depreciation is reintegrated into the calculation of capital gains upon resale. This does not call into question the interest of the scheme, but must be anticipated in a wealth exit strategy.

3. Optimizing the depreciable base right from acquisition

The amount you depreciate each year depends on the allocation you make when entering the property on your balance sheet. Three items need to be separated:

1. The land (non-depreciable) — usually 10 to 15% of the price

2. The structural shell (depreciable over ~50 years) — about 40%

3. The components (facade, roof, technical equipment, fixtures) — depreciable over shorter periods (10 to 25 years)

This component-by-component allocation is one of the least known techniques on the market. It allows you to concentrate depreciation on the early years, where it has the most tax value. On a classic Parisian property, it can increase the deductible depreciation of the first ten years by 20 to 30%. A chartered accountant specialized in LMNP will know how to practice it; a general accountant, rarely.

4. Maximizing deductible expenses

Under the actual regime, all expenses incurred for the rental activity are deductible. The list is long, and most owners forget a portion of them:

• Loan interest and bank processing fees

• Property tax (excluding the household waste collection tax - TEOM - recoverable from the tenant)

• Non-recoverable co-ownership charges

• Insurance premiums (non-occupant owner, rent unpaid insurance, water damage)

• Rental management and accounting fees

• Agency fees for letting the property

• Maintenance and repair works

• Small furniture and equipment (deducted or depreciated depending on the amount)

• Travel expenses to visit the property (with receipts)

• Postage, telecommunications, and supplies related to the activity

The reflex to adopt: keep every invoice, every statement, every receipt. An unjustified expense is a lost expense.

5. Anticipating the LMNP / LMP threshold

The status of Non-Professional Furnished Landlord (LMNP) automatically switches to Professional Furnished Landlord (LMP) if the following two cumulative conditions are met:

1. Furnished rental income exceeds €23,000/year

2. Furnished rental income exceeds the other business and employment income of the tax household

In Paris, where rents are high, the first threshold is crossed as soon as the second or third property is under management. The second threshold depends on your personal situation — a retired owner with little other income can switch to LMP with just one rental property.

The consequences are heavy:

Depending on your situation, the LMP status can be a tax trap or, on the contrary, an opportunity. It is an arbitrage that is prepared — not endured.

6. Taking care of the declaration of start of activity

This is the step that many owners rush through — and which can cost them dearly. When you start a furnished rental activity, you must:

• File a P0i declaration with the INPI single window within 15 days of starting the activity

• Obtain a SIRET number under the BIC regime

• Explicitly opt for the actual regime if that is your choice (otherwise, you are by default under the micro-BIC)

The option for the actual regime must be formulated before the declaration filing deadline. A missed option is paid for an entire year — on the income of the financial year concerned, you will remain under the micro-BIC, even if the actual regime would have been more favorable.

7. Recovering the TEOM from the tenant

Technical detail, real gain. The household waste collection tax (TEOM) is included in your property tax notice. It is legally recoverable from the tenant, provided it is correctly mentioned in the lease and regularized each year.

In Paris, the TEOM represents between €80 and €300 per year depending on the property. Multiplied by the holding period, this amounts to several thousand euros that remain unduly charged to the owner when the regularization is not done.

Furnished rental taxation is managed — not endured

None of these seven levers is exceptional when taken in isolation. But their accumulation, on a financed and furnished rented Parisian property, regularly makes the difference between a net return after tax of 2% and a net return of 4%. Over twenty years of ownership, the gap amounts to hundreds of thousands of euros.

The condition for these levers to produce their full effect: to be activated from the start, in the correct order, with support that masters tax law, LMNP accounting, and the operational reality of rental management.

Are you renting or planning to rent furnished in Paris? BAUVAUT supports you throughout the entire journey — choice of regime, tax structuring, day-to-day rental management. Request your free tax and wealth audit — with no obligation.