As a landlord in France, you are required to declare your rental income every year. The choice between the micro-foncier and the régime réel (actual expenses) can represent thousands of euros more or less in tax. Here is everything you need to know.
Unfurnished vs Furnished Lettings: Two Very Different Tax Regimes
The fundamental first distinction:
- Unfurnished letting: income declared as property income (revenus fonciers) — micro-foncier or régime réel foncier
- Furnished letting: income declared as BIC (industrial and commercial profits) — micro-BIC or actual BIC (LMNP/LMP)
This article focuses primarily on unfurnished lettings. For LMNP (furnished), see our article on property tax breaks 2026.
Micro-Foncier: Simplicity First
Micro-foncier applies automatically if your annual gross rental income is below €15,000 (and you do not own property through an SCI, a dismembered ownership structure, or an active Pinel/Malraux scheme).
Principle: a flat allowance of 30% on your gross income. You declare 70% of your rents, which are added to your taxable income.
Example: €8,400 annual rent → Taxable income = 8,400 × 70% = €5,880. At a 30% marginal rate, tax = 5,880 × (30% + 17.2%) = €2,776.
Advantages: no supplementary form, no bookkeeping, very simple declaration.
Disadvantages: if your actual costs exceed 30%, you pay too much tax.
Régime Réel: Optimal When You Have Costs
Under the régime réel, you deduct your actual costs from your rental income. If costs exceed 30% of rents, this is more advantageous than micro-foncier.
Deductible Costs Under the Régime Réel Foncier
| Type of Cost | Deductible? | Conditions |
|---|---|---|
| Mortgage interest | ✅ Yes, 100% | For the rented property only |
| Repair and maintenance works | ✅ Yes | Not construction works |
| Property tax (taxe foncière) | ✅ Yes | Excluding waste collection if recharged to tenant |
| Non-occupying landlord insurance | ✅ Yes | — |
| Property management fees | ✅ Yes | Agency, accountant, management company |
| Service charges (provisionnelles) | ✅ Yes | Excluding charges recovered from tenant |
| Property depreciation | ❌ No (unfurnished) | Only available under LMNP/LMP |
Concrete Comparison Example
Gross rental income: €12,000/year — Actual costs: €5,500/year (interest: €3,000, works: €1,500, property tax: €700, insurance: €300)
| Micro-Foncier | Régime Réel | |
|---|---|---|
| Gross income | €12,000 | €12,000 |
| Allowance / Costs | −€3,600 (30%) | −€5,500 |
| Taxable base | €8,400 | €6,500 |
| Tax (30% marginal + 17.2% social) | €3,965 | €3,068 |
| Saving | — | €897/year |
Property Deficit: A Powerful Tool
If your costs (excluding mortgage interest) exceed your income, you create a property deficit:
- The deficit excluding interest is deductible from your overall income up to €10,700/year
- The surplus is carried forward against property income for the next 10 years
- Excess mortgage interest is carried forward against property income for the next 10 years
Concentrating major renovation works in one or two years (façade restoration, roofing, compliance upgrades…) generates a large property deficit, significantly reducing your income tax for several years.
Which Forms to Use
| Regime | Main Form | Transfer to 2042 |
|---|---|---|
| Micro-foncier | 2042 (line 4BE) | Directly |
| Régime réel | 2044 (detailed property income) | Result on 2042 line 4BA (profit) or 4BC (deficit) |
Micro-Foncier or Régime Réel: When to Choose Which?
- Micro-foncier: if your actual costs are below 30% of your rents (e.g. few works, no mortgage, fully paid-off property)
- Régime réel: if you have an active mortgage (deductible interest), significant works, or costs exceeding 30% of rents
- Important: once you opt for the régime réel, you are locked into it for a minimum of 3 years