Depreciation, what does it actually mean?
Depreciation is an accounting mechanism that lets you deduct a fraction of your property's price from your rental income every year. The basic idea: a building, a floor, a water heater wear down over time, and the tax authority recognises this wear as an expense you can offset against your rent.
The big difference with other expenses (property tax, loan interest, insurance): depreciation is not a cash outflow. You do not actually spend a euro, yet you still reduce your taxable income. That is precisely the mechanism that makes LMNP under the real regime so powerful.
In practice, many LMNP owners pay zero income tax on their rent for 10 to 15 years. Rent hits the bank account every month, but from a tax standpoint the property is already repaid through depreciation. The saving runs into thousands of euros per year.
Annual depreciation of the building
A = annual depreciation, P = building price (excluding land), D = duration in years. Land (10 to 20% of the total price) cannot be depreciated. Each component has its own duration.
What you can depreciate and for how long
Not everything can be depreciated, and the durations vary widely. Land does not wear out: it is excluded from the calculation. First mandatory step, split the land value from the building value. In practice, land represents 10 to 20% of the total price, closer to 20% in Paris and major cities, closer to 10% in rural areas.
The building itself breaks down into components with different durations. The main structure (walls, roof, foundations) is depreciated over 25 to 40 years. Major equipment like the boiler, ventilation, or insulation lasts 10 to 20 years. Finishes (fitted kitchen, paint, floors) are depreciated over just 5 to 10 years.
Furniture and appliances follow the same logic. A bed, a sofa, a fridge: each with its own useful life. Your accountant groups everything into a global depreciation plan that runs year after year. The first year requires some setup work; after that, the calculation is automatic.
| Component | Depreciation period | Example |
|---|---|---|
| Main structure | 25 to 40 years | Walls, roof, foundations |
| Major equipment | 10 to 20 years | Boiler, ventilation, insulation |
| Finishes | 5 to 10 years | Fitted kitchen, paint, floors |
| Furniture | 5 to 10 years | Beds, sofas, appliances |
| Land | Not depreciable | Value constant over time |
How to compute your depreciation: a worked example
Let's take a concrete case. An apartment bought for €250,000 with €25,000 in notary fees, giving a total price of €275,000. Your accountant estimates that 15% of the price represents the land (about €41,000), the rest (€234,000) being the building share. Add €15,000 of new furniture to make the unit rentable as furnished.
Over a 30-year depreciation period for the building, you deduct \frac{234{,}000}{30} = 7{,}800 € per year. Furniture depreciated over 5 years gives you \frac{15{,}000}{5} = 3{,}000 € per year. Total annual depreciation over the first five years: €10,800. After year five, the fully depreciated furniture drops out of the calculation, but the building continues for 25 more years.
If your annual rent is €12,000 with €3,500 of actual expenses (property tax, landlord insurance, management), your taxable result becomes 12{,}000 - 3{,}500 - 10{,}800 = -2{,}300 €. Tax due: zero. And it keeps running as long as depreciation covers your profit, typically 10 to 15 years depending on your property.
10-15 ans
Typical tax-free years under real LMNP
80-90%
Depreciable share of the purchase price
+3 000 €/an
Median annual tax saving
Pitfalls to avoid before you jump in
First pitfall: the depreciation cap. Article 39C of the French tax code limits deductible depreciation so that it cannot create a loss offsettable against your other income. If your depreciation exceeds your positive result, the excess is not lost but carried forward indefinitely, usable as soon as your result turns positive again.
Second pitfall: capital gains on resale. Since the 2025 Finance Act, the depreciation you have taken reduces the cost basis of the property for capital gains calculations. Concretely, you pay more tax at the time of selling than before the reform. Something to anticipate for medium-term resale strategies.
Third pitfall: switching to the real regime is binding. You can move from micro-BIC to real easily, but going back is locked for three years. The real regime requires an accountant (€400 to €800 per year). Only make the switch if your annual tax saving clearly exceeds that cost.
Moving from micro-BIC to the real regime is binding for three years. The 2025 reform also increases capital gains tax on resale. Weigh the saving during the holding period against the extra cost at sale before committing.
Summary, and how to simulate it easily
LMNP depreciation remains the most powerful tax lever for furnished rentals in France. When calibrated well, it neutralises income tax on rent for 10 to 15 years, with savings that easily exceed €30,000 over the full depreciation life for an average property.
But it is only interesting in a specific context: real regime (so mandatory bookkeeping), property with a large building share, and a long-term holding strategy. For simpler cases or first steps, micro-BIC with its 50% flat-rate deduction remains more practical and less demanding.
Buy&Rent simulates both regimes side by side, with depreciation pre-calculated based on your property and your tax situation. In seconds, you can see which one is more advantageous for you, without opening Excel or booking an accountant just to test a hypothesis. The winning regime is the one that maximises your after-tax cash flow over the full holding period.