What Is Amortissement and Why It Matters
Amortissement (depreciation) is the most powerful tax tool available to furnished rental landlords under régime réel. It allows the landlord to deduct, each year, a fraction of the cost of the property (excluding land) and its contents as a notional accounting expense — even though no cash actually leaves the landlord's pocket. The effect is to reduce taxable BIC income by the annual depreciation amount, often to zero.
A simple example: a landlord acquires a furnished flat for €320,000. The land value is estimated at €60,000, leaving €260,000 of depreciable building. Depreciated over 30 years, this generates €8,667 of annual depreciation. Add €15,000 per year of other deductible charges (mortgage interest, insurance, taxe foncière, management fees), and the landlord has €23,667 of annual deductible expenses against €18,000 of rental income — a BIC deficit of €5,667 before the amortissement limitation rule applies.
What Can Be Depreciated: The Component Method
French accounting requires depreciating a building by components (approche par composants) rather than as a single asset. Each component has its own useful life and depreciation rate. This approach — mandatory for régime réel — typically produces a higher aggregate annual depreciation than a single-rate approach on the total building value, because short-life components (fittings, appliances, furniture) are depreciated quickly.
| Component | Depreciation period | Notes |
|---|---|---|
| Building structure (gros œuvre) | 40–50 years | Slowest component — walls, roof, foundations |
| Building shell (second œuvre) | 20–30 years | Windows, flooring, internal walls, ceilings |
| Electrical and plumbing installations | 15–20 years | Assessed separately from building structure |
| Kitchen installation (built-in) | 10–15 years | Fitted kitchen treated as a separate component |
| Furniture and furnishings | 5–10 years | Beds, sofas, tables, wardrobes, curtains |
| Household appliances | 5–8 years | Washing machine, dishwasher, refrigerator, oven |
| IT equipment | 3–5 years | Relevant if property is used for co-working or high-spec remote work setups |
A French accountant will set up the depreciation schedule at the start of régime réel. The breakdown between structure, shell, fittings, and furniture is critical — a property with a higher proportion of short-life components (new kitchen, new bathroom, new furniture) generates more annual depreciation in the early years. Depreciation schedules are specific to each property and must be supported by valuations or cost allocations. Poorly documented schedules are a common target in tax authority audits.
The Amortissement Limitation: No LMNP Loss From Depreciation Alone
Under Article 39 C CGI — as interpreted following the amortissement limitation doctrine — amortissement deducted under régime réel by an LMNP landlord cannot create or increase a BIC deficit. More precisely: if the deduction of amortissement would push the BIC result below zero, the excess amortissement is not lost — it is suspended and carried forward indefinitely, to be deducted against future BIC income from the same activity.
This limitation applies specifically to LMNP landlords. LMP landlords can deduct amortissement freely and create or increase a deficit that offsets their global income immediately. For LMNP, the practical consequence is that amortissement reduces income to exactly zero in a good rental year, with any excess suspended — not lost. Over time, the suspended amortissement accumulates and can be used to offset future income when receipts increase.
How the Limitation Works in Practice
Other deductible charges (mortgage interest, insurance, taxe foncière, management fees) can create a BIC deficit without restriction — the limitation applies only to the amortissement element. This means in the example above, the €15,000 of other charges can reduce BIC income below zero and create a loss carryable against future meublé income. Only the amortissement portion that would take the result further into negative territory is suspended. The distinction matters for planning the optimal depreciation schedule.
The Critical 2025 Change: Amortissement Recapture on Sale
Before 1 January 2025, LMNP landlords who sold their property benefited from the full immobilier capital gains regime: the gain was calculated on the difference between the sale price and the original acquisition price, with no adjustment for amortissement previously deducted. This meant that a landlord who had deducted €100,000 of amortissement over 15 years paid no capital gains tax on that €100,000 — it was effectively tax-free.
From 1 January 2025, this changes for LMNP landlords who have taken amortissement under régime réel. The acquisition price used to calculate the capital gain must be reduced by the total amortissement deducted during the rental period. This means the taxable gain is increased by exactly the amount of amortissement previously claimed — a pound-for-pound recapture.
The 2025 recapture applies to LMNP landlords who have deducted amortissement under régime réel and then sell the property. LMP professional capital gains regime is not affected in the same way — LMP landlords benefit from their own exoneration rules (CGI Art. 151 septies). Landlords who have been on micro-BIC throughout and never elected régime réel are not affected, as no amortissement was deducted. The change is prospective — but affects the calculation on all future sales by LMNP landlords who have used régime réel, including those who elected years ago.
Planning Amortissement Strategy Post-2025
The 2025 recapture change does not make régime réel and amortissement uneconomic — annual income tax savings still compound significantly over a long holding period. But it changes the optimal strategy. Landlords planning to hold for fewer than 10 years need to model the full acquisition-to-sale cycle before electing régime réel. Landlords planning to hold for 20+ years benefit from the taper relief on the immobilier gain, which extinguishes the IR portion after 22 years and the social levies portion after 30 years — at which point the recapture is moot because the underlying gain attracts zero tax regardless.
A French accountant is essential for setting up the depreciation schedule, filing BIC accounts, and optimising the component breakdown. Their fees — typically €800–€2,000 per year for a meublé rental — are themselves deductible charges under régime réel. The depreciation schedule must be documented from the first year of régime réel and cannot be backdated.
- What amortissement does: under régime réel, the landlord deducts each year a fraction of the building cost (excluding land) and contents as a notional expense — no cash outflow. Combined with other charges, this routinely reduces taxable BIC income to zero. Land is non-depreciable; building and all contents depreciate at rates set by component.
- Component method (PCG Art. 322-2): building must be broken into components, each depreciated at its own rate — structure (40–50 years), shell (20–30 years), fittings (15–20 years), kitchen (10–15 years), furniture (5–10 years), appliances (5–8 years). Higher proportion of short-life components = more annual depreciation in early years.
- Amortissement limitation (CGI Art. 39 C): LMNP landlords cannot use amortissement to create or increase a BIC deficit — excess amortissement is suspended and carried forward indefinitely against future meublé income. Other charges (mortgage interest, insurance, etc.) can create a deficit without this restriction. LMP landlords face no such limitation.
- 2025 recapture (CGI Art. 150 VC amended): from 1 January 2025, LMNP landlords selling a depreciated property must reduce the acquisition price by cumulative amortissement when calculating capital gains. This is a pound-for-pound recapture taxed at 19% IR + 17.2% social levies (~36.2%) — approximately €28,960 additional tax on €80,000 of cumulative amortissement in the example above.
- Strategic implications: régime réel remains optimal for long-term holders (20+ years), because immobilier taper relief extinguishes the IR gain after 22 years and social levies after 30 years — making the recapture moot. Short-term holders (<10 years) need to model the full acquisition-to-sale cycle before electing régime réel. Depreciation schedule must be set up from the first year and documented — it cannot be backdated.
Our English-speaking French lawyers and tax advisers model full acquisition-to-sale amortissement strategies for non-resident meublé landlords, including the 2025 recapture analysis and holding period optimisation.
Request a Tax AnalysisThis article is for general information and educational purposes only. It does not constitute legal advice and does not create a lawyer-client relationship. Tax rules are subject to annual change — always seek qualified French legal and tax advice before making decisions based on amortissement strategy.
Key Legal References
Amortissement: annual depreciation deduction of building (excl. land) and contents under régime réel
Amortissement limitation (LMNP): LMNP landlords cannot use amortissement to create or increase a BIC deficit; excess suspended and carried forward
LMNP capital gains recapture from 1 January 2025: acquisition price reduced by cumulative amortissement on sale
Component method (approche par composants): mandatory depreciation by component with individual useful lives
