Le nouveau dispositif qui enterre le LMNP : Loi Jeanbrun - Emeric Eveno, Papillon Patrimoine

Mastering property taxation is crucial in real estate, as it is one of the most heavily taxed sectors. For example, with unfurnished rentals, earning €6,000 might result in €3,000-€4,000 in taxes, whereas certain tax niches can lead to zero tax. The new construction market, for instance, offers reduced notary fees (2% instead of 8%, sometimes even waived by the promoter), and eliminates the need for renovation work. Historically, France has excelled in savings but not investment. This trend is changing, with new regulations aiming to stimulate investment, particularly in housing. The last three years have seen a significant lag in housing construction, partly due to the end of the Pinel scheme and rising interest rates. Pinel previously supported 50,000 new homes annually, but this dropped to 10,000-12,000 units. The introduction of the "Prêt à Taux Zéro" (PTZ) — a zero-interest loan for principal residence purchases — has helped, offering preferential rates and boosting purchasing power, especially now with higher interest rates. To address the housing shortage and re-engage investors, a new law, the "Loi Jean-Brun" (formerly the "Statut du Bailleur Privé"), has been introduced. This law aims to provide a stable fiscal framework for private landlords. A key aspect of real estate taxation is the distinction between furnished and unfurnished rentals. For unfurnished rentals, if you have €12,000 in rent and €6,000 in expenses (property tax, loan interest), your taxable income is €6,000. This is then subject to your marginal tax rate (11%, 30%, 41%, or 45%) plus 17.2% for social contributions (CSG-CRDS), potentially reaching 60-70% of your net income. This high taxation makes unfurnished rentals often unsustainable. The "LMNP à l'amortissement" (Loueur Meublé Non Professionnel with depreciation) scheme was a popular solution. It allowed landlords of furnished properties to deduct a "fictitious" charge, the depreciation of the property's value (typically 80% of the building's value over 25 years), in addition to standard expenses. This often resulted in zero taxation on rental income. However, the LMNP à l'amortissement has been under threat. While it was initially slated to end in 2026, it has been maintained due to concerns that its abolition would lead many landlords to stop renting, exacerbating the housing crisis. A change was made last year: the depreciation is now reintegrated into the capital gains calculation upon sale. This means if you buy a property for €200,000 and sell it for €250,000 after 15 years, and have depreciated €100,000, your capital gains will be calculated on €150,000 (the difference between €250,000 and the depreciated value of €100,000), not €50,000. This makes long-term holding (15-18 years) still favorable for depreciation, but shorter terms (10 years) might make direct taxation on unfurnished rentals more appealing. The LMNP scheme, though a tax niche, incentivizes investment in housing. Its potential removal is being considered as part of a broader strategy to increase housing supply, as France is significantly behind its housing construction targets (370,000 new homes annually needed, according to the Court of Auditors in 2023). The Loi Jean-Brun (Jean-Brun Law) is designed to address this. It offers depreciation for unfurnished rentals, similar to the LMNP, allowing 80% of the property's value to be depreciated. This not only neutralizes property income tax but can also reduce taxable income from other sources (e.g., work income). For example, if you have €10,000 in rent, €9,000 in expenses, and an additional €8,000 in Jean-Brun depreciation, you can use €1,000 to offset rental income and the remaining €7,000 to reduce your work income, leading to significant tax savings. This is a framework law, providing stability for 20-24 years, unlike the LMNP, which is a tax niche and can be easily modified. However, under the Jean-Brun law, rents are capped. This makes expert advice crucial to compare the effectiveness of different rental options (unfurnished, furnished, Jean-Brun). While Jean-Brun can apply to existing properties, it requires substantial renovation work (at least 25% of the purchase value), making it primarily geared towards new construction. Another complementary scheme is the "Location Loyers Intermédiaires" (LLI), which can be combined with Jean-Brun. The LLI caps rents (similar to Jean-Brun) but offers 20 years of property tax exemption and a reduced VAT rate of 10% (instead of 20%) on new construction purchases for investors. Combining Jean-Brun (tax neutralization, income reduction) with LLI (20 years property tax exemption, 10% VAT) and low notary fees (2%) makes new construction highly attractive. To benefit from LLI, the investment must be made through a "Société Civile Immobilière à l'IR" (SCI under income tax regime) and held for a minimum of 15 years. This also facilitates intergenerational wealth transfer, offering succession duty exemptions of €100,000 per child per parent, up to €300,000 per property, until December 31, 2026. New construction offers several advantages: no renovation work (saving at least €800-€1,000 per square meter for current standards), no major co-ownership works for at least 15 years, and quicker tenant acquisition. It also comes with a 2-year warranty on the dwelling and a 10-year warranty on the building structure. While older properties might offer "bargains," new properties provide peace of mind and modern amenities like balconies, natural light, and underground parking, which are increasingly sought after. For example, a new T3 apartment (64 sq m with a 6 sq m balcony) in Argenteuil, 16 minutes from Saint-Lazare station, could be purchased for €280,000. Such properties would rent for around €1,400-€1,450, potentially covering the loan repayment. Promoters often offer attractive prices during the initial pre-commercialization phase to secure the "Garantie Financière d'Achèvement" (GFA), requiring 50% of units sold. When considering new construction, it's essential to consult professionals who can provide a global market view and make detailed financial and tax simulations. They can assess the project's quality, location, and potential returns. Key questions include the floor plan, exposure (avoiding views of undesirable areas), and the builder's reputation. Regulatory perspectives ensure that the final product matches the initial designs and photos. Negotiation points for new construction often include notary fees (aiming for 2% or less) and price reductions (potentially 2% or more). These negotiations are typically handled by the sales agent on behalf of the client. Banks are generally supportive of new construction loans, provided the debt-to-income ratio (35% for principal residence) is respected. Current interest rates are around 3.5% to 3.8%. The PTZ can significantly reduce the effective rate, especially for those who haven't owned a principal residence in the last two years. For investors, the company Papillon Patrimoine, for example, is compensated by the promoter (around 5% of the sales price), ensuring no additional cost to the buyer. They aim to negotiate the best possible price directly with the promoter. The new construction market has seen price adjustments and a restructuring of promoters. The Jean-Brun scheme is intended to boost new housing production to prevent a severe housing crisis in the coming years. Regarding down payment, new construction typically requires less (2-5% of the amount) due to lower notary fees and the availability of PTZ. Payments are structured: after signing a reservation contract and securing financing, the final deed is signed. Buyers can choose a "total franchise," where no monthly payments are made until delivery (e.g., two years later), or a "partial franchise," where interest is paid on funds disbursed during construction. Total franchise is often preferred by investors as loan interest is tax-deductible. For those interested, Papillon Patrimoine offers comprehensive support, from feasibility studies and financial simulations to accompanying clients through financing, interaction with promoters, delivery, and even post-purchase rental management. They also offer rental insurance covering unpaid rents and charges (up to €90,000) and a resale guarantee (covering €40,000-€60,000) in case of unforeseen circumstances like separation or job loss, protecting against market downturns. The current favorable environment for new construction, with stable municipal politics, provides a window of opportunity.