Rental income in France: understanding the two tax regimes in 2026

Income from bare property rental is taxed in the category of rental income (revenus fonciers). Two regimes coexist: the micro-foncier and the actual-cost regime. Their operation, eligibility conditions, and filing implications differ.

The micro-foncier regime

The micro-foncier regime applies by default when the household's gross annual rental income does not exceed €15,000. A flat allowance of 30% is applied to gross receipts, representing all charges. Taxable income therefore corresponds to 70% of rent received, without deducting actual expenses.

This regime is incompatible with certain schemes: properties benefiting from a specific deduction (Périssol, Besson, Robien, Borloo, Cosse), SCPI units, etc. In these cases, the actual-cost regime applies by default.

The actual-cost regime

The actual-cost regime is compulsory above €15,000 of gross rental income, or available on election below this threshold. It allows deduction of actual expenses effectively incurred:

• Loan interest and bank arrangement fees
• Condominium charges (non-recoverable share of service charges)
• Insurance premiums
• Property tax (taxe foncière)
• Management and agency fees
• Repair, maintenance, and improvement works

The rental deficit

When deductible charges exceed rental income, a rental deficit arises. This deficit can be offset against overall income up to €10,700 per year (CGI art. 156 I 3°).

Higher ceilings exist in certain cases: €15,300 for properties benefiting from the Périssol deduction or the Cosse scheme, and €21,400 for energy renovation works enabling the property to change energy class (2026 DGFiP Income Tax Guide, p. 350).

The fraction of the deficit exceeding the applicable ceiling — as well as the fraction attributable to loan interest — can be carried forward against rental income over the following 10 years.

Theoretical example: a taxpayer receiving €12,000 in rent with €18,000 in charges (including €8,000 loan interest and €10,000 works) would generate a €6,000 deficit, potentially offsettable against overall income. The actual impact depends on the household's overall tax situation.

The nature of works: an important distinction

Not all works are treated in the same way:

• Repair and maintenance works: deductible in the year of payment
• Improvement works (without structural modification): deductible
• Construction or extension works: not deductible under rental income rules

The distinction between repair and improvement is a frequent source of disputes with the tax authority.

Election of the actual-cost regime

The election of the actual-cost regime, when made voluntarily, commits the taxpayer for a minimum period of 3 years. It cannot be revoked before this period.

2026 updates

New depreciation scheme for bare property rental (LF 2026, art. 47; CGI art. 31)
A mechanism for deducting depreciation of a fraction of the acquisition price has been created for bare rental properties, subject to rent caps, tenant income conditions, and a 9-year rental commitment. It applies to acquisitions made or building permits filed between 21 February 2026 and 31 December 2028.

Extension of the increased rental deficit ceiling
The €21,400 ceiling for energy renovation works (change from class E/F/G to A/B/C/D) has been extended until 31 December 2027 (LF 2026, art. 47).

Special regimes

Properties classified as historic monuments or located in certain protected areas fall under derogatory regimes allowing broader deductions. These schemes fall outside the scope of standard rental income rules.

Filing

Rental income is declared on form 2044 (actual-cost regime) or on form 2042 (micro-foncier). The net rental result is then incorporated into the overall income tax calculation.

Filing your rental income return

Declaring rental income involves multiple forms depending on the applicable regime, and the rules for carrying forward rental deficits are precise. A form error or transfer error can have significant tax consequences.

Fidencia.tax guides you through your rental income return — correct forms, deficit carry-forward, 2026 new provisions taken into account.

Declare your rental income — fidencia.tax

This article is provided for informational and educational purposes only. It does not constitute tax, legal, or financial advice. The rules presented are general in nature and may not apply to your personal situation. Consult a qualified professional (chartered accountant, tax lawyer, wealth management adviser) for any tax decision. Fidencia.tax is a filing assistance tool and does not replace professional advice.

Legal references: CGI articles 14 to 31, 156 I 3°; 2026 DGFiP Income Tax Guide (rental income pp. 158 and 350).