Rental investment: furnished rental, Denormandie system… The key measures of the 2025 budget

While the Senate is examining the finance bill for 2025 this week, the government has just tabled amendments of primary interest to non-professional furnished rental companies.

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Rejected at first reading by the National Assembly, the finance bill (PLF) for 2025 arrives this Monday, November 25 in the Senate, in its version initially developed by the government. A version that the latter however intends to enrich via amendments filed this weekend, particularly in terms of rental investment. For the record, article 24 of the PLF 2025 provides that, in the case of property rented in LMNP (non-professional furnished rental), accounting depreciation, i.e. the annual loss in value of the property, will now be included in the calculation of the capital gain on sale.

A measure which will increase the amount of the capital gain realized upon the resale of the property and, therefore, the tax to be paid. The government thus intends to remove one of the main tax advantages furnished rental, in order to encourage landlords to switch their properties to the long-term bare rental market, in a shortage situation. Faced with the outcry among property owners, the government has just filed a amendment foreseeing that “article 24 of the PLF 2025 will only apply to thoseessions carried out from January 1, 2025“. If you sold your property rented in LMNP before this date, do not panic, the PLF 2025 will not be retroactive, you will not be liable for a “surplus” tax on your capital gain.

No increased taxation for certain serviced residences

Another concession made by the government to LMNP rental companies, article 24 will not target all categories of property indifferently. “During the examination of the finance bill for 2025, the parliamentarians (deputies) expressed the desire to provide special treatment for investment in certain types of housing which contribute to the development of the rental offer in favor of certain populations whose needs present particular challenges”recalls a second amendment of the government.

This therefore plans to “not to apply the provisions of Article 24 to housing located in certain service residences and establishments for elderly or disabled people». In other words, resale taxation will not be increased for properties rented in LMNP in senior residences. Will it be the same for properties located in student residences? “The idea is to exclude them” also, responds The Ministry of Housing to Capital.

The Denormandie tax advantage refocused and shortened

Still in terms of real estate investment, a third amendment of the government restricts the Denormandie tax advantage. As a reminder, the Denormandie entitles you to an income tax reduction, representing 9% to 21% of the price of the property, if you buy an old home to rent it for between 6 and 12 years, bare, as your main residence, and by committing to renovate it. Furthermore, the rent must not exceed certain ceilings and the tenant’s reference tax income cannot exceed certain thresholds. Finally, the accommodation must be located in a municipality concerned by the national plan for the revitalization of medium-sized town centers “Action coeur de ville”, or in a municipality having signed a territorial revitalization operation agreement.

There law on degraded housing of April 9 had extended the Denormandie to investments made in co-ownerships in great financial difficulty and had extended it by one year, until December 31, 2027. The government amendment reestablishes, from January 1, 2025, the Denormandie device in its drafting prior to the law on degraded housing. He therefore refocuses it on “the only municipalities characterized by a strong need for rehabilitation of their city center”. A mission led in September 2023 by the General Inspectorate of Finance “noted the difficulties of Denormandie in responding to the challenges of co-ownerships in difficulty”argues the government. More broadly, this mission “not having concluded that it was effective” of Denormandie, the amendment also brings back the extinction of the system to December 31, 2026, instead of the end of 2027.