Two Capital Gains Regimes: LMNP vs LMP
The tax treatment of capital gains on selling a French furnished rental property depends entirely on whether the landlord is LMP or LMNP. These two regimes operate under different legal frameworks, with different tax rates, different exemption mechanisms, and — since January 2025 — a significant new distinction in how the acquisition price is calculated for LMNP landlords who have depreciated the property.
For non-resident landlords, both regimes apply in France regardless of country of residence. French capital gains tax on French-situs property cannot be avoided by selling via a foreign entity or through a foreign intermediary — the situs rules in virtually all double-tax treaties give France the primary right to tax.
LMNP Capital Gains: The Immobilier Regime
LMNP landlords sell their property under the régime des plus-values immobilières des particuliers — the private individual real estate capital gains regime. The taxable gain is calculated as the difference between the sale price and the acquisition price (net of acquisition costs), and is taxed at 19% income tax plus social levies: 17.2% for non-EU/EEA residents; 7.5% for EU/EEA residents following the de Ruyter ruling. This gross rate (36.2% for non-EU/EEA, 26.5% for EU/EEA) is then reduced by taper relief based on the holding period.
The IR portion of the gain is reduced by 6% per year of ownership from year 6 to year 21, and by 4% in year 22 — giving total exemption after 22 years. The social levy portion is reduced at different rates: 1.65% per year from years 6–21, 1.60% in year 22, and 9% per year from years 23–30 — giving total exemption after 30 years.
| Holding period | IR taper per year | Social levy taper per year | Effective IR rate | Effective social levy rate |
|---|---|---|---|---|
| 0–5 years | 0% | 0% | 19% | 17.2% / 7.5% |
| 6–21 years | 6%/year (years 6–21) | 1.65%/year (years 6–21) | Reducing: 13% → 1% | Reducing: ~8.9% → 4.5% |
| Year 22 | 4% (final year) | 1.60% | 0% — fully exempt | ~2.9% |
| Years 23–30 | — | 9%/year | 0% | Reducing to 0% |
| Year 30+ | — | — | 0% | 0% — fully exempt |
The 2025 Amortissement Recapture: The Most Important Change
Before 1 January 2025, LMNP landlords who had depreciated their property under régime réel calculated their capital gain on the full original acquisition price — meaning all amortissement deducted during the rental period was effectively tax-free on exit. This was one of the major advantages of the LMNP régime réel strategy.
From 1 January 2025, Article 150 VC CGI was amended to require LMNP landlords to reduce their acquisition price by the total cumulative amortissement deducted during the rental period when calculating the capital gain. This applies to sales occurring from 1 January 2025, regardless of when the rental activity started or when amortissement was deducted.
The 2025 recapture applies to all LMNP landlords who have deducted amortissement under régime réel — including those who elected years ago. Landlords on micro-BIC (no amortissement deducted) are unaffected. LMP professional gains regime is not affected in the same way. For long-term holders (22–30 years), the recapture is partially or fully offset by taper relief. For short-term and medium-term holders (under 15 years), the recapture represents a significant additional tax cost that must be modelled before making a régime réel election.
LMP Capital Gains: The Professional Regime
LMP landlords sell under the régime des plus-values professionnelles — the professional capital gains regime. The treatment distinguishes between short-term gains (on assets held less than 2 years or on amortissement recapture) and long-term gains (on assets held 2+ years, above amortissement recapture).
The most powerful feature is the total exemption available under Article 151 septies CGI when annual meublé receipts do not exceed €90,000 (for standard LMP landlords) or €250,000 (for para-hôteliers). Both the long-term gain and the short-term income-tax component are fully exempt from income tax. Only SSI social contributions remain due on the short-term gain component. For LMP landlords below these thresholds, this is dramatically more favourable than the LMNP immobilier regime — particularly compared to the recapture-affected LMNP position from 2025.
For LMP landlords below €90,000 annual receipts, the professional gains exemption can achieve zero IR immediately on sale — compared to the 22-year waiting period for IR exemption under the LMNP immobilier regime. However, SSI social contributions remain due on the short-term gain component under LMP, while the social levy taper under LMNP extinguishes all social charges after 30 years. The optimal regime depends on the property value, holding period, receipts level, and other income. Modelling the full scenario is essential.
Non-Resident Landlords: Additional Considerations
Non-resident landlords pay capital gains tax in France on the disposal of French property regardless of their country of residence. French capital gains tax must be withheld and paid by a mandatory French tax representative (représentant fiscal accrédité) for non-EU/EEA sellers where the transaction exceeds €150,000 (CGI Art. 244 bis A). The representative is jointly and severally liable for the tax and must be appointed before the sale is notarised. Failure to appoint a representative blocks completion of the notarial deed.
Double-tax treaties do not eliminate French capital gains tax on French-situs property — they only prevent double taxation in the country of residence. Under virtually all French tax treaties, France has the primary (often exclusive) right to tax capital gains on immovable property. The treaty then provides the country of residence with a credit or exemption for the French tax paid.
Following the de Ruyter ruling (CJEU 2015) and subsequent French legislative response, residents of EU and EEA member states (including Switzerland under specific conditions) who are subject to social security in their country of residence pay social levies at 7.5% instead of 17.2% on capital gains from French property. This represents a saving of 9.7% on the social levy component — significant on a large capital gain. Non-EU/EEA residents pay the full 17.2% with no reduction.
- LMNP immobilier regime (CGI Art. 150 U, Art. 150 VC): 19% IR + 17.2% social levies (7.5% for EU/EEA — de Ruyter) on the net taxable gain. Taper relief: IR fully extinguished after 22 years of ownership; social levies after 30 years. Acquisition costs can be added to the acquisition price (actual or forfait de 7.5%).
- 2025 amortissement recapture (CGI Art. 150 VC amended): from 1 January 2025, LMNP landlords who have deducted amortissement under régime réel must reduce the acquisition price by cumulative amortissement when calculating the gain. This is a pound-for-pound increase in the taxable base. Landlords on micro-BIC throughout are unaffected. The recapture applies to all sales from 2025 regardless of when amortissement was deducted.
- LMP professional gains regime (CGI Art. 151 septies): full IR exemption if annual receipts below €90,000 (LMP) or €250,000 (para-hôteliers). Short-term gain and long-term gain both exempt from IR below the threshold. SSI social contributions remain due on the short-term gain component. Above the thresholds, partial exoneration applies up to €126,000 / €350,000.
- Non-EU/EEA non-resident tax representative (CGI Art. 244 bis A): mandatory for non-EU/EEA sellers where the transaction exceeds €150,000. The representative is jointly and severally liable for the capital gains tax. Must be appointed before the sale is notarised — failure to appoint blocks the notarial deed. Fees are typically 0.5–1% of the sale price.
- Double-tax treaties: under virtually all French treaties, France has the primary (often exclusive) right to tax capital gains on French immovable property. Treaties prevent double taxation but do not eliminate French capital gains tax. The country of residence provides a credit or exemption for French tax paid. Selling via a foreign entity does not circumvent French capital gains tax on French-situs property.
Our English-speaking French lawyers advise non-resident landlords on capital gains tax planning, the 2025 amortissement recapture, mandatory tax representative appointments, and double-tax treaty analysis before sale.
Speak to a French Tax LawyerThis article is for general information and educational purposes only. It does not constitute legal advice and does not create a lawyer-client relationship. Tax rates and rules are subject to change — always seek qualified French legal and tax advice before selling a French property.
Key Legal References
LMNP capital gains: immobilier regime — 19% IR + social levies on net taxable gain
Taper relief schedule: IR fully exempt after 22 years; social levies after 30 years. From 2025: LMNP acquisition price reduced by cumulative amortissement
LMP professional gains: full IR exemption below €90,000 annual receipts (LMP) or €250,000 (para-hôteliers); partial up to €126,000/€350,000
Non-EU/EEA non-resident: mandatory accredited tax representative for transactions above €150,000; representative jointly liable for capital gains tax
EU/EEA residents: reduced 7.5% social levy rate on capital gains from French property (de Ruyter ruling)
