In summary…
The property deficit deductible from total income is capped at €10,700 per year. For energy-efficient renovations that bring a property up to energy efficiency classes E, F, or G, this cap doubles to €21,400. The 2026 Finance Law extended the scheme to work paid for until December 31, 2027. In the 30% tax bracket (%), this translates to €6,420 less tax in a single year.
1. As provided for in Article 156, I-3° of the French General Tax Code (CGI)
A landlord using the actual expense method deducts their expenses from their rental income. When expenses exceed rental income, the deficit resulting from expenses other than loan interest is offset against total income, up to a limit of €10,700 per year. Any excess can be carried forward to offset rental income in the following 10 years.
The ceiling is raised to €21,400 for energy renovation expenses that bring the dwelling from class E, F or G to class A, B, C or D. It applies to work for which the quote has been accepted since November 5, 2022 and which is paid until December 31, 2027.
2. The calculation: €6,420 less tax
€10,000 in rent, €3,000 in interest, €40,000 in renovations. The interest is first deducted from the rent, leaving €7,000 in rental income. The renovations wipe out this income, resulting in a €33,000 deficit.
€21,400 is deducted from total income. In the 30% tax bracket (%): €6,420 less tax, compared to €3,210 with the standard €10,700 threshold. The remaining €11,600 is carried forward to offset rental income over the next 10 years. The €7,000 of net rental income for the year is not taxed.
3. Concrete example
Situation. A couple taxed in the 30% tax bracket (%) rents an apartment rated F: €10,000 in rent, €3,000 in mortgage interest. The energy renovation program is estimated at €40,000.
Issue. With the standard ceiling, only €10,700 of deficit is deductible from overall income, meaning €3,210 less tax in the year of the work.
Strategy. Renovation calibrated to bring the accommodation from F to at least D, quote accepted and work paid before December 31, 2027, DPE before and after, rental maintained until December 31 of the third year.
Result. €21,400 deducted from total income: €6,420 less tax, or €3,210 more than with the standard limit. €11,600 of deficit carried forward to rental income for the next 10 years.
4. Conditions that negate the advantage
The rental agreement must continue until December 31st of the third year following the deduction. A sale or repossession of the property before this date will invalidate the deduction from total income.
The improvement in energy efficiency rating is proven: an energy performance certificate (EPC) before the work, and an EPC after the work. Without both, the €21,400 cap does not apply.
Loan interest is never deducted from total income. And the actual expense method is mandatory: the micro-property tax regime does not allow any deductions for renovation work.
5. What needs to be finalized before December 31, 2027
The €21,400 limit applies annually. The payment schedule for the work, whether over one or several calendar years, therefore determines the total savings. This schedule is established before the quotes are signed, not after the final invoice, and it must be considered in conjunction with the household's other rental income. The 10-year deferral assumes future rental income to offset it: a landlord with only one rental property should verify this from the outset.
Frequently asked questions
What is the maximum land deficit allowed in 2026?
€10,700 per year on total income, increased to €21,400 for an energy renovation that brings the dwelling from E, F or G to A, B, C or D.
Until when does the €21,400 limit apply?
For work for which the quote was accepted since November 5, 2022 and paid up to December 31, 2027, the date set by the 2026 finance law.
Are loan interest payments included in the €21,400?
No. They are only deductible from rental income. Only the deficit resulting from other expenses is deductible from overall income.
Are you renting out a property rated E, F or G? Book a property management consultation: we'll calculate the savings and schedule the work before the end of 2027.
