The French real estate market is undergoing a phase of reorganization. The end of the Pinel scheme on December 31, 2024, the tax reform for furnished rentals, and the gradual return of buyers after two years of price corrections are reshaping investment strategies. For those looking to grow their wealth through real estate, the benchmarks of the past no longer quite apply.
Taxation of rental investment after the end of Pinel
As of January 1, 2025, it will no longer be possible to initiate a new investment under the Pinel scheme. The government has not created an equivalent scheme for individuals in new properties. This choice marks a clear break from the logic that has prevailed since 2014, where a key tax advantage guided most first-time investors towards new properties.
Alternatives exist, but they require more nuanced structuring. The LMNP status (non-professional furnished rental) remains accessible. The Denormandie scheme targets older properties requiring renovation in certain municipalities. The property deficit allows for the deduction of renovation costs from rental income. The Intermediate Rental Housing (LLI), supported by institutional investors, also paves the way for SCPI focused on this segment.
Tax optimization now relies on legal structuring (SCI at IS, LMNP, dismemberment) rather than a single scheme. This is a paradigm shift for investors accustomed to checking a box on their tax returns. Field reports vary on the ease of access to these structures for unaccompanied investors.
Before embarking on an acquisition project, it may be useful to explore the Investissement Patrimoine website to compare the available approaches based on your situation.
Reform of furnished rentals and impact on capital gains
Article 84 of the finance law for 2025 has modified the calculation of capital gains upon the resale of properties rented as non-professional furnished rentals. The depreciation deducted during the rental period is now reintegrated into the calculation of taxable capital gains. In other words, the tax advantage obtained during the holding period partially carries over to the tax bill upon exit.
This change directly affects investors who relied on LMNP to combine low-tax income and advantageous resale. The structure remains relevant in certain cases, but the calculation of net profitability must incorporate exit taxation right from the acquisition phase. An investment planned over eight or ten years does not have the same tax profile as an investment over twenty years with this new development.
The exact scope of this measure is still subject to divergent interpretations among wealth management advisors. Initial feedback shows that the most prepared investors are those who had already anticipated a long holding period.
Rental pressure and profitability in medium-sized cities
The shortage of rental housing is intensifying in several French metropolitan areas. The decline in new construction, combined with the exit of many properties from the rental market (energy renovations, prohibition of renting thermal sieves), reduces the available supply. Rents are rising in tight areas, including medium-sized cities that have long been considered secondary markets.
For an investor, this pressure changes the profitability equation. A property located in a medium-sized city with an active rental market can offer a rental yield higher than that of a large metropolis, where acquisition prices remain high despite recent corrections. Three criteria deserve analysis before making a decision:
- The vacancy rate in the targeted municipality, which reflects the actual demand for housing on the ground
- The local demographic and economic dynamics (presence of employers, infrastructure projects, university hubs)
- The condition of the existing stock and the proportion of properties classified F or G, which signals renovation opportunities but also regulatory constraints
Gross profitability is no longer sufficient to evaluate an investment. Co-ownership charges, property tax, the cost of potential energy compliance renovations, and the risk of unpaid rents must be included in the calculation from the outset.
SCPI and diversification of real estate assets
SCPI (real estate investment trusts) are experiencing a resurgence of interest after a period of doubt related to the correction in share values observed among certain players. Collections are rising again, driven by diversified SCPI or those specialized in segments like health, logistics, or LLI.
The main attraction of SCPI for a wealth investor lies in the mutualization of risk. Rather than concentrating capital on a single property, paper real estate spreads exposure across dozens, if not hundreds, of properties and tenants. The entry ticket, significantly lower than that of a direct purchase, also allows for investment without resorting to a mortgage.
The limitations are well-known: lower liquidity than a financial investment, management fees that weigh on net returns, and dependence on the decisions of the management company. Available data do not allow for a conclusion that SCPI consistently outperform direct investment over the long term. They are a tool for diversification, not a substitute.
Leverage effect of credit and borrowing capacity in 2025
After the sharp rise in rates between 2022 and 2023, the cost of mortgage credit has stabilized. This stabilization restores borrowing capacity to investor households, even if lending conditions remain governed by HCSF standards (capped debt ratio, maximum repayment duration).
The leverage effect of credit remains the main structural advantage of real estate compared to other asset classes. Borrowing to invest allows for building wealth with a limited contribution, provided that rents cover a significant portion of the monthly payments.
- A personal contribution of around ten to fifteen percent of the acquisition price remains the norm required by banks for a rental investment
- The duration of the loan directly influences monthly cash flow: a twenty-year loan reduces monthly payments but increases the total cost of credit
- Additional costs (guarantee, borrower insurance, notary fees) must be integrated into the overall financing plan
The current context offers a window for investors with a solid application. Banks, having significantly restricted access to credit, are looking to revive loan production. Borrower profiles with stable incomes and personal contributions remain favored.
Building a real estate portfolio in 2025 requires accepting increased complexity compared to previous years. Taxation is tightening on certain structures, rental supply is dwindling, and public aid schemes are being reduced. Investors who manage to stand out are those who balance between direct real estate and paper real estate, who structure their taxation in advance, and who analyze each project beyond just the gross yield displayed.