French Landlords Celebrate as Parliament Greenlights Rental Investment Depreciation – A 30-Year Fight Ends
Cannes, France – In a stunning turn of events coinciding with the centennial celebration of the FNAIM Chamber of Alpes-Maritimes, the French National Assembly has voted to allow depreciation on private rental investments acquired between January 1, 2026, and December 31, 2028. This marks a pivotal moment for the French real estate sector, reversing decades of policy and offering a significant boost to landlords and potential investors. This is breaking news with major implications for the French housing market, and is optimized for Google News and SEO visibility.
A Victory Decades in the Making
For years, the French real estate industry has argued that landlords are entrepreneurs deserving of the same accounting benefits as other businesses. The concept of a “lessor” – a term often misunderstood by the public – as a legitimate business operator has been a central tenet of this fight. The approval of depreciation, allowing landlords to deduct a portion of their property’s value over time, is seen as a major win against what proponents call an “anti-real estate ideology” previously championed by President Macron himself. His past assessment of real estate investment as simply a form of income had a chilling effect on the market, and this decision effectively rehabilitates the sector.
What Does This Mean for Investors?
While the initial approval is a victory, the details matter. The current proposal allows for depreciation rates between 3.5% and 5.5% for new properties, depending on rental levels, and 3% to 4% for existing properties. Bercy, the French Treasury, was pressured by deputies to nearly double the initial proposed rates and extend the benefit to existing properties, a significant concession. However, several limitations are expected to impact the number of investors who can actually benefit.
- Income Limits: A key point of contention is the deductible income limit. Currently capped at €8,000 per year, the Senate is being urged to raise this to at least €10,000. This lower limit could steer investors towards smaller, new-build properties to maximize their tax benefits.
- Property Count: Investors are limited to depreciating a maximum of two properties.
- Rental Duration: Properties must be rented for at least 12 years to qualify, aiming to stabilize the rental stock and discourage short-term tax-motivated investments.
- Family Restrictions: Renting to family members is prohibited, a move expected to impact some investments but intended to ensure the measure benefits the broader rental market.
The Senate’s Role: Fine-Tuning the System
The Senate now holds the power to refine the legislation. Key areas under review include increasing the deductible income limit, potentially raising depreciation rates further, and reconsidering the ban on renting to family members. There’s also a push to extend the imputation of ecological improvement work deficits on overall income for an additional two years, a measure already favored by the Minister of Cities and Housing.
Beyond Tax Breaks: A Broader Shift in Perspective
This isn’t just about tax benefits; it’s about recognizing the vital role of private landlords in providing housing. The debate also highlights the ongoing tension between different types of housing. Advocates are calling for depreciation to be extended to individual houses, arguing that they are increasingly built on smaller plots and cater to strong rental demand, particularly in areas where houses are scarce. Furthermore, the potential reintroduction of a wealth tax specifically targeting rental housing is being debated, which could further incentivize investment.
The approval of depreciation, coupled with a potential shortening of the capital gains holding period from 30 to 22 years, could even lead to zero taxation on rental income for long-term investors. This represents a fundamental shift in how the French government views rental property – not just as an income source, but as a legitimate and valuable investment.
This legislative victory, 30 years in the making, is a testament to the perseverance of industry advocates and a recognition of the crucial role landlords play in the French housing ecosystem. It’s a revolution, as one industry leader put it, and a signal that France is finally embracing a more supportive environment for residential real estate investment. For those considering entering the French rental market, now is the time to consult with a financial advisor and explore the potential benefits of this landmark legislation.
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