2025 Tax Reform: LMNP or SCI Subject to Corporate Income Tax for Your Rental Property?
The status of a non-professional furnished rental property owner (LMNP), long considered an optimal tool for tax optimization, has just suffered a serious setback.
The mandatory inclusion of depreciation in the calculation of capital gains upon resale now requires investors to reassess their tax strategies, as highlighted in a recent study published by Les Secrets de l’Immo.
What the 2025 Finance Act Actually Changes
Before 2025, one of the major advantages of the LMNP was the ability to depreciate the property without affecting the calculation of capital gains upon resale. Now, the reform introduces a requirement to add back these depreciation allowances to the taxable capital gain at the time of sale, which automatically increases the tax burden on investors.
A concrete example illustrated by Les Secrets de l’Immo:
• Purchase price: €200,000
• Depreciation over 10 years: €50,000
• Resale price: €300,000
• Before the reform: Taxable capital gain of €100,000
• After the reform: Taxable capital gain of €150,000
Taxation thus becomes significantly less favorable in the short and medium term.
LMNP or SCI subject to corporate income tax (IS): two tax regimes that are now more similar
With the reinstatement of depreciation deductions, the tax differences between the LMNP and the SCI subject to corporate income tax (IS) are narrowing:
• Under the LMNP, the reinstated depreciation deductions significantly increase the taxable capital gain in the short and medium term. However, progressive tax allowances based on holding period remain applicable, allowing for a full exemption after 30 years.
• Under the SCI subject to corporate income tax (IS), capital gains are calculated based on the net book value, which also allows for significant depreciation of the held assets. However, no progressive exemption is provided, and the capital gain remains fully subject to corporate income tax upon resale.
Taxation of Rental Income Based on Holding Period
The taxation of rental income varies significantly depending on the chosen tax regime:
• LMNP: Rent is taxed according to the income tax schedule after deducting expenses and depreciation, which can be advantageous for taxpayers in lower tax brackets.
• SCI subject to corporate income tax: Rental income is taxed at 15% on profits up to €42,500, and at 25% on amounts above that threshold. Profits distributed as dividends are subject to a second round of taxation in the form of income tax and social security contributions.
Quelle stratégie privilégier selon l’horizon d’investissement ?
Selon la durée de détention prévue du bien immobilier, l’étude des Secrets de l’Immo recommande différentes stratégies :
• Court terme (<8 ans) : La SCI à l’IS est souvent avantageuse en raison des forts amortissements permettant de réduire la fiscalité immédiate. Le LMNP peut toutefois être envisagé si les charges initiales (travaux, intérêts d’emprunt, frais d’acquisition) suffisent à annuler l’impôt durant la période de détention.
• Moyen terme (8-13 ans) : Le choix dépend des objectifs précis. Si l’objectif est de réinvestir dans la société avec une fiscalité optimisée (taux IS de 15 %), la SCI à l’IS reste attractive. Si l’investisseur souhaite garder une certaine souplesse lors de la revente, le LMNP offre un avantage grâce aux premiers abattements à partir de 6 ans.
• Long terme (>13 ans) : Le LMNP retrouve une position avantageuse grâce aux abattements progressifs aboutissant à une exonération totale après 30 ans, malgré la réintégration des amortissements.
The tax reform now requires real estate investors to engage in more in-depth strategic planning, according to a study by Secrets de l’Immo, which notes that the choice between the LMNP and SCI (corporate real estate investment entity subject to corporate income tax) depends heavily on one’s wealth management goals and individual tax situation.
