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Professional furnished rentals (known as LMP in French) and non-residents: Clarifications from the tax authorities (BOI-BIC-CHAMP-40-10)

Professional furnished rentals (known as LMP in French) and non-residents: Clarifications from the tax authorities (BOI-BIC-CHAMP-40-10)

Published on : 19/04/2026 19 April Apr 04 2026
Firm News

Context: Reform of the LMP regime under the Finance Act for 2026

Article 155 of the French Tax Code (CGI) provides that furnished rental activity is considered to be carried out on a professional basis when two cumulative conditions are met:
  • the household’s furnished rental income exceeds €23,000;
  • this income is higher than the household’s other earned income subject to income tax.

The Finance Act for 2026 has modified, for non-resident taxpayers, how the second condition—relating to the “predominance” of furnished rental income—is assessed.


New rule applicable to non-residents since 2026

Before the Finance Act for 2026, for non-resident taxpayers, the predominance condition was assessed by considering only earned income taxable in France.

From now on, for taxpayers who are not tax residents in France, the predominance of furnished rental income is assessed by taking into account all net earned income of the taxpayer (and, where applicable, of the tax household) that:
  • is of the same nature as that referred to in Article 155, IV-2-3° of the CGI (salaries and wages, industrial and commercial profits (BIC), agricultural profits (BA), non-commercial profits (BNC), and income covered by Article 62 of the CGI);
  • and is effectively subject to an equivalent income tax in the country of residence.

Income that is exempt under specific provisions in the country of residence is therefore not taken into account when assessing predominance.

On April 15, 2026, the tax authorities commented on these new provisions by updating their official guidance, and more specifically paragraph 165 of BOI-BIC-CHAMP-40-10. They specify the types of earned income to be considered for non-residents:
  • income from professional activities, whether self-employed or salaried, including pensions and life annuities;
  • income from any other regular or occasional activity for which the taxpayer takes steps to generate income, as well as profit-making activities carried out on a personal basis.

However, the following are not taken into account when assessing the predominance of furnished rental income:
  • income comparable to real estate income;
  • investment income (movable capital income);
  • income derived from furnished rental activity itself.


In practice: a significant impact for non-residents
For non-resident taxpayers, qualifying as a professional furnished property owners now requires comparing furnished rental income not only with earned income taxable in France, but with all earned income taxed in the country of residence and falling within the categories listed in Article 155 of the CGI.

This change automatically restricts access to the status of professional furnished rental property owner for non-residents whose primary earned income is received and taxed abroad.

Do not hesitate to have your personal situation reviewed by an expert to assess the impact of those new provisions.
 
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