Rental loan insurance: deduction from rental income

If you rent out unfurnished accommodation under the actual expense regime, the insurance premiums covering your loan repayments are deductible from your rental income, for their actual and documented amount, provided all other conditions are met and they were paid within the year. The French tax authorities (BOFiP) treat them as borrowing costs since they are ancillary to a loan: they are recorded on the line item for loan interest. In this case, the resulting portion of the deficit can only be offset against rental income in the following ten years. The BOFiP on borrowing costs contains a cross-reference whose application to individuals should be verified with the source (see below). Under the simplified tax regime for rental income (micro-foncier), no separate deduction is possible.

This page deals with individuals who directly own unfurnished rental properties. It does not cover furnished rentals, real estate investment companies, non-resident owners, or loan changes.

The rule in a table

Why loan insurance is deductible

The BOFiP (Official Bulletin of Public Finances) establishes the principle that insurance premiums relating to a property taxed as rental income are deductible for their actual and substantiated amount. It adds a substantive condition: the premiums must be taken out for the purpose of acquiring or maintaining the income. The BOFiP's guidance on insurance premiums does not make the deduction contingent on the nature of the risks covered. It cites loan insurance as an example of such risks.

The contract can be taken out directly, through an intermediary or as part of a group contract.

For loan insurance, three official sources should be read together.

• The BOFiP on insurance premiums indicates that premiums related to a loan are deductible, provided all other conditions are met.
• The BOFiP (Official Bulletin of Public Finances) on interest and loan costs (§ 190) classifies premiums for assurance-vie or death insurance policies taken out to guarantee loan repayment as loan costs. For these premiums, it refers to a paragraph (§ 200) which, in the case of a non-corporate real estate company (SCI) not subject to corporate income tax, imposes a condition of "additional interest." The applicability of this reference to an individual should be verified with the source and in your loan agreement.
• The instructions for the special 2044 declaration (March 2026 edition) also include, among borrowing costs, the premiums for a assurance-vie or death insurance contract taken out to ensure the repayment of the loan.

Another condition to keep in mind: for interest, the BOFiP requires that the loan has been used to acquire, build, repair, improve or maintain buildings given for rent.

Only bonuses paid during the year count

You deduct the premiums actually paid during the tax year. You must be able to justify the deduction. At the request of the tax authorities, the BOFiP (Official Bulletin of Public Finances) requires you to provide a copy of the insurance contract and the insurer's receipt, including details showing the payment date.

Where to declare it

According to the BOFiP (French Official Tax Bulletin), loan-related bonuses are reported on the line for loan interest on the property income tax return. For the 2044 special form, the instructions classify these bonuses among the loan expenses in the section dedicated to loan interest. For this section, they indicate entering, in box H on page 3, the sum of the amounts in each column of line 250. The instructions do not explicitly state that the bonuses are included on this line: check the correct classification in the instructions for the current year.

What happens to the deficit

According to the BOFiP (French Official Tax Bulletin), a loan insurance premium deducted from the interest line is subject to the rules governing borrowing costs when it constitutes ancillary costs to a loan:

• gross income is deemed to primarily compensate for loan interest, and ancillary costs related to a loan are treated as interest (BOFiP BOI-RFPI-BASE-30-20); ;
• the portion of the deficit that comes from interest and borrowing costs is only deductible from property income in the following ten years; ;
• The €10,700 annual limit applies to the portion of the deficit that can be offset against total income. It does not apply to the portion resulting from interest and loan costs, which remains deductible from rental income.

This page does not detail the property deficit itself. A dedicated page covers the €10,700 cap, carry-forward options, and the rental obligation.

As a reminder, the portion of the deficit not resulting from interest and loan costs can be offset against total income up to a limit of €10,700 per year. The property must then remain rented until December 31st of the third year following the offset, subject to the exceptions stipulated in the BOFiP (Official Tax Bulletin). A different limit may apply in certain cases: see the instructions for the special 2044 tax return.

Numerical example (fictitious profile)

Situation. A landlord in Lyon rents out an unfurnished apartment purchased with a loan. He is subject to the actual expense method of taxation. Over the year, he receives €6,000 in rent, pays €6,500 in loan interest, €900 in loan insurance premiums, and €1,600 in other deductible expenses. Assumptions of this hypothetical scenario: rent received throughout the year, no prior losses, no other rental income, and no special tax regimes. The loan costs are treated as interest (BOFiP BOI-RFPI-BASE-30-20, § 110: ancillary costs related to a loan are treated as interest). The insurance premium is therefore treated as interest.

Issue. What impact does the €900 bonus deduction have on the year's deficit, and where does each portion go?

Strategy. Declare the premium on the loan interest line, apply the rule that rents first offset interest, then separate the portion of the deficit that comes from interest and loan costs from the portion that comes from other expenses.

Result.

The €1,400 portion representing loan interest and fees can only be offset against rental income in the following ten years. The €1,600 portion, which is less than €10,700, can be offset against total income, provided the property is rented until December 31st of the third year following the offset. Deducting the bonus adds €900 of carryforward loss: this amount is only available if there is rental income to offset it in the following ten years.

This profile is fictitious. The amounts are hypothetical, no tax rates are used, and the calculation does not predict the outcome for your specific situation. If your circumstances or the bonus treatment differ from these hypotheses, the breakdown will change.

Under the micro-property tax regime: no separate deduction

The micro-property tax regime generally applies when gross income does not exceed €15,000 (excluding expenses). A standard allowance of 30% is automatically applied. This allowance is considered to include all expenses borne by the owner; therefore, loan insurance premiums are not deducted.

If you are subject to the micro-property regime, in order to deduct your actual expenses, you must opt for the actual regime by filing the property income declaration form no. 2044. The option is valid and irrevocable for three years.

What changes depending on your situation

• The tax system : under micro-property tax regime, no separate deduction; under actual tax regime, deduction of premiums paid.
• The use of lending : the condition set by the BOFiP for interest (loan serving buildings given for rent) must be checked on your financing.
• Your montage : housing held in a company, furnished rental or from abroad is subject to its own rules, not dealt with here.
• The BOFiP reference regarding borrowing costs : its scope for an individual should be verified with the source and on your loan agreement.
• Your other expenses : they determine if a deficit appears, and to what extent.
• Your future rental income : the ten-year deferral only applies if there is one.

The rule depends on your situation. No results are guaranteed.