Unfurnished lease, furnished lease, Civil Code lease: the contract you sign decides your taxation.

A home can be let under three possible contracts. The unfurnished lease (bail nu) and the furnished lease (bail meublé) fall under the French law of 6 July 1989, which protects tenants for whom the home is their main residence. The so-called Civil Code lease (bail Code civil) applies when the home is not that main residence: it is then governed solely by the general rules of the contract of lease. These three contracts set different terms, notice periods and deposits. Above all, and this is less well known, they lead to tax regimes that bear no resemblance to one another.

The rule to remember fits in one sentence: it is whether the home is furnished or unfurnished that governs the taxation, not the name of the contract. A home let unfurnished produces rental income (revenus fonciers). A home let furnished produces industrial and commercial profits (bénéfices industriels et commerciaux, BIC), with different allowances, deductions and even a different rate of social levies. The Civil Code lease has no regime of its own: it follows one or the other depending on whether or not the home is furnished.

Three contracts, three legal frameworks

The unfurnished lease (bail nu, or location vide)

This is the standard contract for a main residence, governed by Title I of the 1989 law. It is concluded for at least three years when the landlord is an individual or a family non-trading company (société civile familiale), and for six years when the landlord is a company. On expiry, it is tacitly renewed on the same terms. The tenant can leave at any time with three months' notice, reduced to one month in high-demand areas (zones tendues) and in certain personal situations. The landlord, on the other hand, can only give notice at the end of the term, six months in advance, and on three grounds only: taking the home back to live in it or to house a relative, selling it, or a legitimate and serious reason. The deposit is capped at one month's rent excluding charges, and the rent can only be revised once a year on the basis of the rent reference index (indice de référence des loyers, IRL).

The furnished lease

Since the ALUR Act, a furnished home let as a main residence has fallen under Title I bis of the same law. The contract runs for one year, renewable, or for nine months without renewal when the tenant is a student. The tenant's notice falls to one month in all circumstances, and the landlord's to three months before the end of the term, on the same grounds as for unfurnished letting. The deposit can reach two months' rent excluding charges. In return, the home must contain the furniture set out in the decree of 31 July 2015, from bedding to kitchen utensils, and a detailed inventory of the furniture is added to the check-in report (état des lieux). The ELAN Act created a variant, the mobility lease (bail mobilité): a furnished letting of one to ten months, with no deposit, reserved for people in training, in education, on a temporary assignment or being transferred for work.

The Civil Code lease

This is not a third housing regime, but the ordinary law of leasing, set out in Articles 1713 et seq. of the French Civil Code (Code civil), which applies when the 1989 law does not. Three situations come up: a home let as a second home or pied-à-terre, company accommodation provided by an employer, or a home let to a company that houses an employee in it. In these cases, everything is freely negotiated: the term, the notice period, the deposit, the fees, the rent review. The mandatory surveys, rent control and the obligation to give reasons for a notice to quit do not apply.

Why the taxation changes with the contract

Unfurnished letting: rental income

The rents from a home let unfurnished are rental income, taxed at the income tax scale and subject to 17.2% social levies. Two regimes exist. The micro-foncier regime applies automatically when the household's gross rents do not exceed €15,000 a year: the tax authorities take 70% of the rents into account, the 30% allowance being deemed to cover all expenses. The actual regime (régime réel), by option or above the threshold, deducts the expenses actually paid: loan interest, maintenance and improvement works, property tax (taxe foncière), insurance, management fees.

The appeal of the actual regime lies in the property deficit (déficit foncier). When expenses exceed rents, the deficit is set against the household's overall income up to €10,700 a year, excluding loan interest, and the surplus is carried forward against rental income for the following ten years. This ceiling is raised to €21,400 for energy renovation works paid up to 31 December 2027, provided that a home rated E, F or G is brought up to class A, B, C or D. In return, the home must remain let unfurnished until 31 December of the third year following the offset.

Furnished letting: industrial and commercial profits

Letting furnished is not, for tax purposes, letting a building: it is carrying on a commercial activity. The rents become industrial and commercial profits, with two regimes here too. Micro-BIC applies a 50% allowance to long-term furnished letting, below a receipts threshold of €77,700 for 2025 income declared this year, a threshold uprated every three years. The actual regime goes further: on top of expenses, it allows the building, excluding the land, and the furniture to be depreciated, that is to say a fraction of their value to be deducted each year. On a home bought with a loan, this depreciation, added to the interest, frequently wipes out the taxable result for many years.

Two recent changes temper this advantage. The 2025 Finance Act decided that, for sales made since 15 February 2025, the depreciation deducted reduces the acquisition price in the calculation of the capital gain: a home bought for €220,000 and depreciated by €60,000 is deemed to have been acquired for €160,000 on the day of resale. Serviced residences (résidences services) remain outside this rule, and the allowances for length of ownership continue to apply, with exemption from income tax after twenty-two years and from social levies after thirty years. Then the 2026 Social Security Financing Act raised the CSG (contribution sociale généralisée, the general social contribution) on investment income, bringing social levies on furnished-letting profits to 18.6%, whereas rental income and property capital gains remain at 17.2%.

One last threshold to watch: status. The landlord becomes a professional, and no longer a mere LMNP (loueur en meublé non professionnel, non-professional furnished landlord), as soon as their furnished receipts exceed €23,000 a year and exceed the household's other earned income. They then come under the social contributions of the self-employed, appreciably heavier than social levies, with a flat-rate minimum due even when there is no profit. An investor who accumulates several furnished homes can cross this threshold without having decided to.

The same rent, two taxable bases

Take, by way of illustration, a home let for €600 a month excluding charges, i.e. €7,200 a year, with no works and no loan, owned by a landlord who stays below the thresholds of the micro regimes. Let unfurnished under micro-foncier, the taxable base comes to €5,040. Let furnished under micro-BIC, it falls to €3,600. The rent is identical; half of the tax gap comes from the contract signed alone.

Under the actual regime, the gap can widen in either direction. A landlord who undertakes major works on a home let unfurnished will benefit from the property deficit, which can be set against their other income. A landlord who buys a home in good condition with a loan will benefit from the depreciation available for furnished letting, which neutralises the result without creating a deficit. The two mechanisms cannot be combined, and one cannot move from one to the other without changing contract, and therefore tenant.

How to choose

1. 1Will the home be the tenant's main residence? If so, the 1989 law applies and the Civil Code lease is ruled out, whatever the arrangement.
2. 2What holding period? The depreciation of furnished letting lightens the tax each year but comes back into the capital gain on resale. The longer the holding period, the more the allowances for length of ownership erase this claw-back.
3. 3Are major works ahead? A significant energy renovation argues for unfurnished letting and its property deficit, up to €21,400 a year that can be set against overall income.
4. 4What level of receipts? Beyond €23,000 of furnished rents exceeding other earned income, professional status and its contributions apply.
5. 5What tenant profile? Students, young professionals and people being transferred for work look for furnished homes and accept short leases; families look for the stability of the unfurnished lease.
6. 6What turnover are you prepared to accept? A furnished home is vacated with one month's notice: more flexibility for the landlord, more re-lettings to manage.

General information up to date as at 15 September 2026, liable to change with each Finance Act. It constitutes neither tax advice nor legal advice: the applicable regime depends on your situation, your other income and your plans for the property. Before choosing or changing a lease, have your accountant or your tax lawyer draw up a costing.