French rental loss 2026: €10,700, €21,400, carry-forward

How a rental loss arises

A déficit foncier exists only under the régime réel, on return 2044. Under the micro-foncier (simplified flat-rate scheme), the flat 30% allowance can never create a loss. The property result is calculated as follows: rent received, minus deductible costs and expenses (maintenance, repair and improvement works, insurance, management fees, taxe foncière (property tax), etc.), minus mortgage interest (service-public.gouv.fr).

If the result is negative, the allocation sheet of form 2044 separates two parts (2026 brochure, p. 363):

• the part arising from expenses other than mortgage interest, deductible from total income;
• the part arising from mortgage interest, deductible only from property income of the following years.

Construction, reconstruction or extension works are not deductible and therefore cannot create a loss.

The ceilings: €10,700, €15,300 and €21,400

According to the 2026 brochure and service-public.gouv.fr:

Is the energy renovation increase still in force? Yes. The DGFiP (French tax authority) 2026 brochure states that the €21,400 limit is “extended until 31.12.2027” by Article 47 of the 2026 Finance Act. Service-public.gouv.fr, checked on 15 April 2026, sets out the conditions:

• the home must move from an energy rating of E, F or G to A, B, C or D, by 31 December 2027 at the latest;
• the expenditure must be covered by a quote accepted on or after 5 November 2022;
• it must be paid between 1 January 2023 and 31 December 2027.

The ceiling is not automatically raised to €21,400: it is increased by the amount of eligible energy renovation expenditure, up to a maximum of €21,400. Losses on historic monuments meeting certain conditions can be deducted without limit.

Worked example

Service-public.gouv.fr gives the following example:

• rent received: €5,000;
• deductible expenses excluding interest: €12,000;
• mortgage interest: €6,000.

The property result is 5,000 − 6,000 − 12,000 = −€13,000. The taxpayer deducts €10,700 from total income, the ceiling, and carries €2,300 forward against property income for the following 10 years.

The 10-year carry-forward

The portion of the loss above the ceiling, and the portion arising from mortgage interest, are set against property income for the following 10 years, oldest losses first (2026 brochure). In practice, they are entered on form 2044, then on line 4BD of the income tax return; the year’s loss is split between lines 4BB (deductible from property income) and 4BC (deductible from total income).

Two further points:

• if your total income for the year is insufficient to absorb the deductible part, the excess is carried forward against your total income for the following 6 years (service-public.gouv.fr);
• if you switch back to the micro-foncier, you can deduct from your net micro income any earlier rental losses not yet used as at 1 January of the first micro year (2026 brochure, p. 158).

The obligation to let for 3 years

Deduction from total income is subject to one condition: the home must remain let until 31 December of the third year following the deduction (2026 brochure). A loss deducted from 2026 income therefore requires letting until 31 December 2029.

If you sell or stop letting before then, property income and total income for the 3 previous years are recalculated as if the loss had not been deducted, which triggers a tax reassessment. The advantage is kept in the event of redundancy, disability or death of the taxpayer or their spouse, and in the event of compulsory purchase of the building.

The rule also applies to partners in property companies not subject to corporation tax: they must keep their shares for at least 3 years and the company must let for the same period.

Good to know: the new Relance logement (Jeanbrun) scheme, open to purchases from 21 February 2026 to 31 December 2028, allows a depreciation allowance to be deducted from property income; the loss it generates is deductible under the ordinary rules described above (service-public.gouv.fr, F39735).

Which professional to consult

The diagnostiqueur (property surveyor) draws up the DPE (diagnostic de performance énergétique, energy performance certificate) before and after the works, which is essential to prove the move from an E, F or G rating to A, B, C or D and to benefit from the €21,400 ceiling. A courtier en crédit (mortgage broker) can finance the works or the purchase; the interest can be carried forward against your property income. If you are considering selling, the notaire (notary) will check that the 3-year letting period has been respected. The agent immobilier (estate agent) helps you re-let quickly so as not to break the commitment.