The Complete Guide to Furnished Property Taxation 2026

I. LMNP status vs. tax regime: No more confusion about the rules of the game

For many property owners, "furnished rentals" are a monolithic concept. However, to optimize your profitability, it is crucial to distinguish between your legal status and your tax option. This confusion is often the primary cause of excessive taxation.

LMNP status: Your legal "framework"

The status of Non-Professional Furnished Landlord (LMNP) defines who you are in the eyes of the law. Unlike unfurnished rentals, which are considered a civil activity, furnished rentals are considered a commercial activity for tax purposes.

This commercial nature imposes a strict rule: registration is mandatory from the first euro earned. You must obtain a SIRET number via the INPI's one-stop shop within 15 days of starting your business. Failure to obtain this number will prevent you from filing a tax return under the actual regime and expose you to a fine of €200.

The tax system: Your calculation method

Once your LMNP status has been established, you must choose how your income will be taxed. You have two options:

• The Micro-BIC regime: This is the simplified regime. The administration applies a flat-rate allowance to your income to represent your expenses. You do not deduct anything else, but you are taxed on a reduced basis. As we will see in detail in the next section, these allowances are at the heart of the 2026 reform and are undergoing a drastic reduction.
• The actual regime: Here, we forget about the flat rate. You deduct your actual expenses (work, interest, electricity, concierge fees) as well asthe depreciation of your property. This is often the most effective option for completely eliminating your tax liability.

Beyond income tax: CFE and social security contributions

Managing a furnished property in Toulon involves other charges that you need to anticipate in your business plan:

• The CFE (Cotisation Foncière des Entreprises): As a commercial activity, you are subject to this tax. The amount depends on the rental value of your property and the rates voted by the metropolitan authority.
• Social security contributions: Your furnished rental income is subject to social security contributions at a rate of 17.2% (CSG-CRDS).
• URSSAF vigilance: If your income exceeds €23,000, you must pay particular attention to your social security status to avoid automatically being reclassified as a professional landlord (LMP), which entails much higher social security contributions (around 40% of profits).

In summary, LMNP status is your framework, but it is your choice of tax regime and your ability to meet your reporting obligations that will determine whether your investment in Toulon is a financial success or a tax drain.

II. The tax deduction revolution: Who wins and who loses?

The transition to 2026 marks a radical turning point with the implementation of the Le Meur law, which imposes unprecedented segmentation of the rental market. This new scale is no longer a hypothesis, but a legislative reality that redraws the boundaries of profitability for Toulon landlords.

The new 2026 scale: drastic segmentation

As of January 1, 2026, the universal flat-rate allowance will be abolished in favor of a clear distinction between housing with an official label and other types of housing.

• The case of unclassified furnished accommodation: For accommodation that does not have a "star" rating, the allowance drops sharply from 50% to 30%. At the same time, the maximum income allowed to remain under this simplified regime is reduced to just €15,000 per year.
• The shield of the "Meublé de Tourisme" classification: Obtaining a classification (from 1 to 5 stars) becomes a strategic defensive maneuver. This label allows you to maintain a 50% tax reduction (compared to 30% for unclassified properties) and to retain a much more comfortable income ceiling, set at €77,700. For a moderate procedural cost (€150 to €300 for 5 years), the tax savings can amount to several thousand euros over the duration of the classification.

The calculation error to avoid: "Gross" Revenue

This is the number one pitfall for owners using platforms such as Airbnb or Booking. To determine whether you exceed the €15,000 (or €77,700) threshold, you should not base your calculation on the net amounts received in your bank account.

• The tax authorities take into account gross revenue, i.e., the total amount paid by the traveler before any deductions.
• If a traveler pays €1,000 and Airbnb charges a €150 commission, €1,000 will be added to your tax meter, even if you only received €850.
• Ignoring this nuance can cause you to unintentionally switch to the actual tax regime without prepared accounting records, which constitutes a "fatal error" when filing your tax return.

Putting the ranking into perspective: Why the "Régime Réel" remains the big winner

Although classification limits the damage in Micro-BIC, it remains an easy solution that is not always the most financially efficient. In the vast majority of cases, the Régime Réel proves to be a "hidden tax windfall."

Whereas the Micro-BIC regime (even if classified) requires you to be taxed on 50% of your income, the actual regime allows you to deduct all of your actual expenses:

• Concierge and cleaning fees.
• Loan interest and borrower insurance.
• Property tax (100% deductible for furnished properties).
• Electricity, internet, and subscriptions.

But the real lever of the actual regime isdepreciation. It allows you to deduct a portion of the value of your property and its furnishings each year on a notional basis.

The result? In many situations, particularly during the first 5 to 10 years after purchase, the combination of expenses and depreciation results in a tax liability close to zero, thereby eliminating 100% of the tax on your rental income.

III. The resale trap: The end of "traditional" tax optimization

For years, furnished rentals have enjoyed an exceptional comparative advantage: the possibility of deducting depreciation each year to reduce immediate taxation, without this having any impact on taxation at the time of resale. This "double advantage" will officially come to an end with the 2025 reform.

The turning point of March 1, 2025

Starting March 1, 2025, the rules of the game will change radically for calculating capital gains. From now on, all depreciation applied since the property was acquired—even that applied before the reform came into effect—will have to be reintegrated into the calculation of taxable capital gains upon resale. This measure marks the end of an optimization strategy widely used by LMNP investors.

Mechanism: a mechanical increase in tax

In practical terms, the depreciation allowances that enabled you to eliminate your taxes on rental income for years are now added to your capital gains, thereby increasing the base on which you will be taxed.

Case study: the financial impact of a resale Let's take the example of an investor who purchased a property for €200,000. After 15 years of operation, he deducted €60,000 in cumulative depreciation. He resells his property for €280,000.

• Old system (sales before March 2025):Gross capital gains were calculated simply as the difference between the sale price and the purchase price:

$$\text{Gross capital gain} = 280,000 - 200,000 = 80,000$$

• The tax (after deductions for the length of ownership) amounted to approximately €24,000.
• New system (sale from 2025):Depreciation deductions are added to the gross capital gain:

$$\text{Gross capital gain} = 280,000 - 200,000 + 60,000 = 140,000$$

• The final tax bill then rises to around €42,000.

The additional tax cost is €18,000 for the owner. This reform therefore encourages you to completely reconsider how long you hold on to your property in Toulon.

Adaptation strategies for homeowners in Toulon

Faced with this new situation, there are several ways to limit the impact of this latent "tax debt":

• Long-term conservation: To benefit from a total exemption, it is necessary to maintain the property for more than 30 years.
• Hold-time allowances: Applicable after five years, these become crucial in offsetting the reintegration of depreciation.

III. The resale trap: The end of "traditional" tax optimization

For years, furnished rentals have enjoyed an exceptional advantage: deducting depreciation to reduce immediate taxes without increasing the cost at resale. This "double advantage" will officially end with the 2025 reform.

1. The turning point of March 1, 2025

As of March 1, 2025, all depreciation applied since the purchase of the property—including depreciation applied prior to the reform—must be reintegrated into the calculation of capital gains upon sale. Only sales signed before this date are exempt from the rule.

2. Basic simulation: the "raw" effect

To understand the mechanism, let's return to our standard example:

• Purchase price: €200,000.
• Depreciation deducted over 15 years: €60,000.
• Resale price: €280,000.

Under the new system, your taxable base is no longer limited to the difference between the sale price and the purchase price (€80,000), but rises to €140,000 due to the reintegration of €60,000 in depreciation. The additional tax cost is estimated at around €18,000.

3. "Expert calculation": to go further

To be more precise, and if you are comfortable with numbers, we will calculate even more accurately how capital gains (CG) are calculated for individuals by incorporating corrective mechanisms.

When purchasing property, certain costs can be added to the purchase price to automatically reduce the taxable base:

• Acquisition costs (7.5%)
• Renovations (15%): A flat rate applies if you have owned the property for more than five years, without even having to provide invoices.

Applying these flat rates to our previous example, the initial purchase price of €200,000 is "inflated" to €245,000, which reduces the taxable base.

4. Cost comparison: what is the real impact on your tax bill?

To fully understand the issue, let's compare the tax due on these two calculation bases, using the average tax rate (tax + deductions after holding allowances) of 30% observed in current simulations:

• With a PV of €95,000 (new system): You will need to sign a check for approximately €28,500 to the tax authorities.
• With a PV of €35,000 (old system): You would have paid only €10,500.

The result is clear: reinstating depreciation generates an additional tax cost of €18,000 when you sell your property in Toulon. This amount corresponds exactly to the tax "recovery" of the depreciation that allowed you to avoid paying taxes for 15 years.

Adaptation strategies for homeowners in Toulon

This new situation requires you to manage your assets differently:

• Long-term holding: The allowance for length of ownership (which applies after five years) becomes vital in order to offset the reintegration of depreciation. Total exemption from tax and social security contributions is only granted after 30 years of ownership.
• Receipts vs. Flat Rates: If you have carried out major renovation work in Toulon (exceeding 15% of the purchase price), keep all your invoices in a safe place. Under the actual income system, "no receipt, no deduction."

IV. Why the "Régime Réel" is your best ally in Toulon

Despite the new tax cost on resale, the actual regime remains, in the vast majority of cases, a real boon for your day-to-day management. Whereas the Micro-BIC regime offers only a flat-rate allowance that does not always reflect your expenses, the actual regime allows you to deduct your actual expenses when calculating your tax.

The strength of actual loads

The principle is simple: instead of applying an arbitrary percentage (30% or 50%), you subtract all the expenses incurred for your rental activity from your income. In Toulon, the list of deductible expenses is extensive and allows you to adjust your tax liability to the reality of your investment:

• Financial costs: Interest on your mortgage and mortgage insurance.
• Local taxation: Property tax, 100% deductible for furnished rentals.
• Management and services: Concierge fees, cleaning and laundry services.
• Running costs: Electricity, water, internet bills, and even Netflix or Canal+ subscriptions made available to travelers.
• Platform costs: Commissions charged by Airbnb or Booking.
• Maintenance: Small equipment and routine repairs (plumbing, locksmithing).
• Condominium: Condominium fees actually paid and non-refundable.

Important note: if you do the cleaning yourself, you cannot deduct anything for your own time spent.

Depreciation: the key to paying zero tax

The "real tax break" of the actual regime lies indepreciation. This mechanism allows you to deduct the theoretical depreciation of your real estate and its furnishings each year.

For a studio apartment purchased for €150,000, depreciation can represent between €5,000 and €7,500 in additional deductible expenses each year. Everything in your home is depreciable: sofa, bedding, appliances, and dishes. Thanks to this combination of actual expenses and depreciation, it is common to completely eliminate the tax on your rent during the first 5 to 10 years of operation. In some cases, you can even generate a tax loss that can be carried forward to future profits.

When should you take the plunge?

The question is no longer whether to switch to the actual regime, but how to optimize this transition. Once your expenses exceed the 30% flat rate (or 50% for classified properties), the actual regime becomes mathematically advantageous. For a property owner in Toulon, this transition simply requires rigorous accounting and the support of a professional to secure the breakdown of your property's value.

V. URSSAF vigilance and professional status (LMP): do not confuse the thresholds

The success of your business in Toulon may lead you to reach crucial regulatory milestones. However, there is often confusion between tax status (LMNP or LMP) and social security obligations (URSSAF). Owners of furnished tourist accommodations must monitor two separate thresholds that can be triggered independently of each other.

1. The tax threshold: Switching from LMNP to LMP

The transition to Professional Furnished Landlord (LMP) status is automatic if you meet two conditions simultaneously:

• Your gross annual rental income (from all furnished rentals combined) exceeds €23,000.
• These receipts represent more than 50% of your tax household's income from employment (salaries, pensions, etc.).

If you meet both of these criteria, you become a professional for tax purposes. This changes how your capital gains are managed upon resale and how any losses are carried forward.

2. The social threshold: Mandatory membership of URSSAF

This is where the real "catch" lies for short-term rentals. Regardless of your other income (salaries or other), as soon as your seasonal rental income exceeds €23,000 gross per year, you become liable for social security contributions.

• LMNP with social security contributions: You can remain LMNP for tax purposes (for example, if you have a high salary that exceeds your rental income), but you will be required to register with the Social Security system for self-employed workers.
• The financial impact: You no longer pay only 17.2% social security contributions on your profits, but social security contributions of around 40% on your taxable income.
• Traceability: Platforms such as Airbnb and Booking now automatically report your income to the authorities, making it immediately visible to URSSAF when you exceed the threshold.

Ultimately, LMNP/LMP status is a tax matter. Social security contributions follow a different logic. For furnished tourist accommodation, if your annual income exceeds €23,000, you will be liable for social security contributions, even if you remain LMNP for tax purposes.

3. Management strategies for property owners in Toulon

Faced with this tightening, anticipation is your only defense against seeing your profitability collapse under the weight of social security contributions:

• Manage your bookings: If your revenue is approaching the €23,000 threshold at the end of the year, it may be wise to anticipate your level of activity in order to avoid unintentionally exceeding the social security threshold. Planning your bookings in advance will allow you to manage your situation with peace of mind.
• Be mindful of gross revenue: Remember that URSSAF and the tax authorities calculate these thresholds based on the amounts paid by travelers (including platform fees) and not on what is paid into yourbank account.
• Expert advice: If you expect to exceed these thresholds significantly, it is essential to consult a specialized accountant to structure your business (possibly through a company) before being subject to a tax adjustment.

Conclusion:

The year 2026 will not be a mere milestone, but a true paradigm shift for your investments in Toulon. The end of the legislative reprieve and the entry into force of the Le Meur law mark the end of passive management. Total transparency of income via platforms and stricter tax controls now require a new level of rigor for every owner.

Navigating by sight is no longer an option for those who wish to preserve the profitability of their assets. Between the reinstatement of depreciation and the reduction of flat-rate allowances, every decision must be guided by clear and anticipated strategic choices. Professionalizing your business, with the support of specialized experts, is now your best asset for transforming these regulatory constraints into a lever for the sustainability of your rental investment.

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