French rental income tax 2026: micro-foncier or réel

What is property income?

According to the DGFiP (French tax authority) 2026 practical brochure, property income is income from built and unbuilt property: rents, agricultural rents, income from shares in property companies not subject to corporation tax, etc. The following are not property income:

• a home you keep for your own use (main or second home, or lent free of charge);
• furnished lettings, taxed as bénéfices industriels et commerciaux (BIC, industrial and commercial profits), even when occasional;
• sub-letting of unfurnished property, taxed as bénéfices non commerciaux (non-commercial profits).

Property income is subject to the income tax scale and to social charges of 17.2% (service-public.gouv.fr). The 2026 social security financing law raised the CSG (general social contribution) on investment income from 9.2% to 10.6%, but the 2026 brochure specifies that property income remains at the 9.2% rate. The tax is collected at source as monthly or quarterly instalments (acomptes).

The micro-foncier: €15,000 and a 30% allowance

The micro-foncier applies automatically if the gross property income of the whole tax household does not exceed €15,000, excluding service charges (2026 brochure, p. 158). Three useful points:

• the threshold is not pro-rated: a six-month letting is still compared with €15,000;
• it combines your direct unfurnished lettings and your share of the income of property companies in which you are a partner;
• if the rents are subject to VAT, the amount excluding VAT is used.

How to declare: you enter the gross amount of rent received, without applying the allowance yourself, on line 4BE of form 2042, with the address of the property. The 30% allowance is applied automatically. No supplementary return needs to be completed.

Example: €9,000 of annual rent gives taxable income of €9,000 × 70% = €6,300, subject to the tax scale and social charges.

Exclusions: the micro-foncier does not apply if you let a listed historic monument, a property held as nue-propriété (bare ownership, without the right of use), a home for which you claim the Loc’Avantages tax reduction, or a home placed under a depreciation scheme (Périssol, Besson, Robien, Borloo neuf) or a specific deduction scheme (Cosse, Borloo ancien, etc.). The new Relance logement (Jeanbrun) depreciation scheme is also incompatible with the micro-foncier (service-public.gouv.fr, F39735).

The actual-expenses regime: when and how

The régime réel is compulsory once your gross rent exceeds €15,000. Below that, you can elect for it simply by filing form 2044; the election is then irrevocable for 3 years (2026 brochure). After those three years, filing a 2044 counts as an election for that year only.

Net property income is calculated as follows: rent received − deductible costs and expenses − mortgage interest. Receipts include rents, expenses normally borne by the owner but charged to the tenant, subsidies and compensation payments, as well as the security deposit where it is used to cover unpaid rent, repairs or service charges (service-public.gouv.fr).

A positive result on the 2044 is carried over to line 4BA of the 2042. If it is negative, it is a déficit foncier (property loss), which can be set against overall income up to €10,700 a year, subject to conditions (see our article on property losses).

Deductible expenses under the actual-expenses regime

Service-public.gouv.fr and the 2044 notes list in particular:

• repair and maintenance costs;
• improvement works, for example energy renovation;
• provisions for copropriété charges (service charges in a jointly owned building);
• management fees paid to third parties (manager, letting agency, caretaker, legal costs), and a flat €20 per unit for other management costs (correspondence, travel, telephone);
• insurance premiums (home, unpaid rent, borrower);
• mortgage interest;
• certain taxes, such as the taxe foncière.

Not deductible are construction, reconstruction or extension works. If the home is only partly let, only the expenses relating to the let part are deductible, in proportion to the apportionment shares (tantièmes).

Micro or actual: how to decide

The calculation is simple: the réel becomes worthwhile once your deductible expenses exceed 30% of the rent, since that is what the flat allowance already covers. This is often the case in the early years of a mortgage-financed purchase, when interest is high, or in a year of major works. But the election commits you for 3 years: an exceptional year of works may justify the réel, provided the following two years do not penalise you.

New for 2026: the 2026 budget law created a scheme allowing the depreciation of a portion of the price of a home let unfurnished to be deducted from property income, subject to rent and income caps and a 9-year letting commitment, for acquisitions made between 21 February 2026 and 31 December 2028 (2026 brochure, new measures). Service-public.gouv.fr presents it under the name Relance logement (Jeanbrun): it covers homes in apartment buildings, new or existing with major works, and the deduction is capped at €8,000 per year per household in the general case. The page states that a bill under discussion would relax its conditions.

Which professional to consult

Before buying to let, a courtier en crédit (mortgage broker) costs the loan, whose interest will be deductible under the réel, and an agent immobilier (estate agent) assesses the market rent. The diagnostiqueur (property surveyor) draws up the DPE (energy performance certificate) required for letting, which guides energy renovation works. The notaire can advise you on holding the property directly or through a société civile (non-trading company). The choice between micro-foncier and réel is settled with the tax office or a tax adviser.