How to Invest in French Real Estate While Cutting Your Tax Bill: The 2026 Schemes Explained

Real estate is one of the main ways to build wealth in France, and the tax code offers several schemes to reduce what you pay while you do it. But "defiscalisation" doesn't mean the same thing from one scheme to the next: some give you a tax reduction, some let you deduct expenses, and, crucially, they don't all treat your rental income the same way. This guide walks through the schemes available in 2026, how each one works, and, for each, whether your rents are taxed or not.

One important heads-up first: the Pinel scheme, long the best-known option, closed to new investors on 31 December 2024. Its replacement, the Jeanbrun scheme, took over in 2026, and it works on a completely different principle, so it's worth understanding before anything else.

A word on how rental income is normally taxed

By default, rent in France is taxable. Unfurnished rentals are taxed as property income (revenus fonciers), furnished rentals as industrial and commercial profits (BIC). What the schemes below do is change that outcome, either by cutting the tax through a reduction, or by shrinking the taxable rent through deductions and depreciation. Keeping that distinction in mind makes each scheme much easier to understand.

1. The Jeanbrun scheme (private-landlord status), the replacement for Pinel

How it works. Introduced in the 2026 Finance Act and applying to purchases made between 21 February 2026 and 31 December 2028, Jeanbrun is the scheme that replaces Pinel, but with a key difference: where Pinel gave a tax reduction, Jeanbrun gives depreciation. You buy a new or off-plan flat (or an older one with substantial works; individual houses are excluded), let it unfurnished as the tenant's main home, and commit to renting for at least nine years. In return, you depreciate part of the purchase price against your rental income each year.

The depreciation rate depends on how far you cap the rent:

Rental type	Annual depreciation	Annual ceiling
Intermediate rent	3.5%	€8,000
Social rent	4.5%	€10,000
Very social rent	5.5%	€12,000

Rent and tenant-income caps apply, set by decree according to location, and the scheme works anywhere in France with no zoning. It has to be held through an income-tax structure (you personally, or an SCI taxed at income tax; a company taxed at corporate tax doesn't qualify).

Are the rents taxed? The rent stays taxable as property income, but the depreciation is deducted from it, so the taxable rent shrinks and can be reduced to nothing while the depreciation covers it. If the depreciation exceeds your net rental income, the resulting deficit can, within limits, reduce your overall income. So the rent isn't exempt, but the mechanism can neutralise most or all of it. As this is a brand-new scheme, the fine print (exact duration, caps, decrees) is still settling, so confirm the current terms before committing.

2. Property deficit (déficit foncier), unfurnished with renovation works

How it works. With an unfurnished rental, if your deductible expenses, especially renovation works, exceed your rental income, you create a "property deficit." This is a deduction from your taxable income, not a reduction of your tax bill, so the value depends on your marginal tax rate. Crucially, it isn't deducted all in one year: the works portion of the deficit offsets your overall income only up to €10,700 a year (raised to €21,400 for certain energy-renovation works). Anything above that, plus the part of the deficit coming from loan interest, isn't lost but carries forward against your future rental income only, for up to ten years. It sits outside the €10,000 cap on tax niches.

Are the rents taxed? The rents are taxable as property income, net of charges and works. In the first year a slice of the deficit (up to €10,700) comes off your total income; after that, the carried-forward balance can only wipe out your future rents, not your other income. So the rent ends up neutralised for several years, while your other income is only sheltered up to the annual cap.

A worked example

Take someone with a taxable income (revenu fiscal de référence) of €80,000 who carries out works generating a €50,000 property deficit, assuming the whole deficit comes from works (not loan interest) and little or no net rental income that year.

• Year 1: €10,700 is deducted from their overall income, bringing it from €80,000 down to €69,300. That leaves €39,300 of deficit still to use.

• Following years: those €39,300 no longer touch the overall income. They can only be offset against the rents collected on the property (or other unfurnished rentals), year by year, for up to ten years, until the balance runs out or the ten-year window closes.

So the pattern is exactly as you'd expect: year one hits your overall income, capped at €10,700; after that it only shelters your rental income. If part of the deficit had come from loan interest, that part would never touch the overall income at all, only the rents.

3. Denormandie, renovating older property in town centres

How it works. A cousin of the former Pinel, aimed at older property renovated in certain town centres. It gives a tax reduction of up to 21% of the purchase price (works included), spread over the rental commitment, within the overall €10,000 tax-niche cap.

Are the rents taxed? Yes. Denormandie gives you a reduction on your income tax bill, but it doesn't exempt the rent: the rental income remains taxable as property income under the normal rules. The benefit is the reduction, not untaxed rent.

4. Malraux, restoring buildings in protected areas

How it works. For properties in designated conservation areas that you restore. You get a tax reduction of 22% or 30% of the restoration works, within a works ceiling of €400,000 over four years, so up to €120,000 of reduction. It sits outside the €10,000 niche cap, which makes it attractive to high earners.

Are the rents taxed? Yes. Malraux rewards the restoration works through a reduction; the rental income itself remains taxable under the normal property-income rules once the property is let.

5. Monuments Historiques, listed heritage buildings

How it works. For listed or registered heritage properties, charges and restoration works are deductible, potentially without the usual limits, and outside the €10,000 cap. It's a powerful but demanding scheme, really aimed at very high incomes with the means to restore heritage property.

Are the rents taxed? The rent is taxable as property income, but the uncapped deductibility of charges and works can wipe out not only the rent but a large slice of your other income, which is where the saving comes from.

The takeaway

There's no single best way to invest in French real estate tax-efficiently; there's the one that fits your income level, your appetite for works and management, and how long you plan to hold. Keep the key distinction in mind: Jeanbrun, the property deficit and Monuments Historiques work by shrinking the taxable rent (and sometimes your other income) through depreciation or deductions, while Denormandie and Malraux give a tax reduction but leave the rent taxable. And watch the €10,000 cap on tax niches, which several schemes count against and others escape. Run the numbers on the after-tax return over your real holding period, not just the headline benefit, before you buy.

Looking to invest in French real estate while living in France?

If you are an expatriate living in France and want to explore which property scheme fits your situation, your income and your long-term plans, you can book a free introductory call to discuss your situation and identify the key points that should be checked.

Disclaimer: This article is for general information and educational purposes only. It is based primarily on official French government sources and other trusted references. It does not constitute personalised tax, legal or financial advice. These schemes carry conditions, caps and risks, and the rules change regularly, the figures above may no longer be current when you read this. Investment and tax outcomes depend on individual circumstances and the property concerned.