Jeanbrun Mechanism: Beware the Trap of Reinstatable Amortization

The Jeanbrun scheme is appealing because of the tax benefits it offers for unfurnished rentals. However, the requirement to recapture depreciation upon resale could turn a profitable deal into an unpleasant surprise. Here’s a closer look.
 

Since the passage of the 2025 Finance Act, the inclusion of depreciation in the calculation of capital gains—which was initially limited to furnished rentals—now applies to the Jeanbrun program. The financial implications of this expansion vary considerably depending on whether one invests in furnished or unfurnished rentals.
 

Depreciation Fully Utilized in Unfurnished Rentals
In furnished rentals (LMNP), deductible expenses are first applied against income. Depreciation is applied only afterward, and solely to reduce the taxable income to zero, without creating a tax loss. As a result, a portion of the available depreciation often remains unused, and only the portion that was actually deducted can be recaptured in the event of a sale.
 

For unfurnished rentals under the Jeanbrun scheme, the mechanism is entirely different. Expenses and depreciation are combined to produce a property loss that can be offset against total income, up to a limit of 10,700 euros per year. Depreciation is therefore, in the vast majority of cases, fully utilized each year. As a direct result, at the time of resale, the amount that can be added back when calculating the capital gain will be significantly higher.
 

A telling example: Jeanbrun vs. LMNP
Let’s consider two investors with identical profiles: 35,000 euros in taxable income, a new 45-square-meter property in Bordeaux purchased for approximately 205,000 euros, 90% of which was financed by a loan.
 

The first investor uses the Jeanbrun program for intermediate-level rental properties. His annual rent income totals 7,906 euros, his deductible expenses amount to 7,032 euros, and his flat-rate depreciation is 5,738 euros. The entire depreciation amount is deducted, resulting in a property loss of 4,864 euros, which reduces his total income. On a day-to-day basis, the investment is attractive, with a positive cash flow of 1,787 euros per year.
 

The second investor invests under the LMNP scheme. His income is higher (9,990 euros), but due to tax offsets, the actual depreciation he can claim is limited to just 2,112 euros per year. His annual cash flow amounts to 2,112 euros.
The difference becomes striking at the time of resale after 15 years. The Jeanbrun landlord has accumulated 86,070 euros in reinstatable depreciation, resulting in an additional capital gains tax of 18,935 euros. The LMNP lessor, on the other hand, recaptures only 31,680 euros, resulting in an additional tax liability of 6,970 euros. Final tally: a net gain of 7,870 euros for the former, compared to 24,710 euros for the latter—a difference of 214%.
 

Ways to Mitigate the Impact
This observation does not, however, condemn the Jeanbrun system. Several mechanisms make it possible to reduce—or even eliminate—the effect of reinstatement.
 

First factor: tax deductions based on holding period. The effective capital gains tax rate, which reaches 36.2% during the first five years, drops below 15% after 20 years and falls to zero after 30 years. The longer an investor holds the property, the more the cost of reinclusion is reduced.
 

Certain situations even qualify for a full exemption: gifts and inheritances do not trigger any capital gains, the sale of a primary residence is exempt—even if the property was previously rented—and an investor who has been renting the property for at least four years may sell it tax-free if they use the proceeds to purchase their primary residence within 24 months.
 

A factor to consider from the outset
The Jeanbrun scheme remains an attractive tax tool, particularly thanks to the property deficit that can be offset against total income. However, this strength becomes a weakness if the investor does not take into account, at the time of acquisition, the impact of recapturing depreciation on future capital gains. The trade-off between immediate cash flow and resale cost must be anticipated, taking into account the planned holding period and the overall wealth management strategy. 

Transfer, delayed resale, or conversion to a primary residence: the options are there, but you need to identify them from the start. A well-informed investor is worth two.