PTZ, LMNP, Gifts: What France’s 2027 Draft Budget Means for Real Estate

A particularly important bill for real estate

The 2027 Finance Bill was submitted to the French National Assembly on 1 October. Parliamentary scrutiny begins in October, with an initial phase focusing particularly on tax measures.

For the real estate sector, several provisions in the initial version of the bill deserve particular attention.

Article 7 focuses on redirecting public support towards family housing and long-term rentals. In particular, it proposes changes to the PTZ interest-free loan scheme (Prêt à Taux Zéro) and to the tax regime applicable to non-professional furnished rentals (LMNP – Location Meublée Non Professionnelle).

However, one essential distinction must be kept in mind: this is still a draft law. Parliament may amend, remove or add to the proposed measures before the budget is finally adopted.

The PTZ could be extended for certain families

In the initial version of the bill, the Government proposes changes to the eligibility conditions for the PTZ, introducing an exemption for households expecting a child or with at least one dependent child under the age of three.

The measure is therefore intended to make home ownership more accessible to certain young households at a time when their housing needs are changing.

The impact on a property purchase is relatively straightforward: if a household can finance a larger proportion of its purchase through an interest-free loan, or becomes eligible for the scheme, its overall financing costs may decrease. This could improve its ability to complete a property purchase.

The overall effect on the market will, however, depend on the number of households concerned and the final terms of the PTZ scheme.

LMNP could become less advantageous

The most significant change for property investors is likely to concern furnished rentals.

The bill proposes capping the deduction of depreciation under the LMNP regime at 2.5% of the property's purchase price and €7,000 per year per tax household. It also proposes limiting the period during which certain previously carried-forward depreciation allowances may be used.

The stated objective is to gradually bring the taxation of furnished rentals closer to that of unfurnished rentals, while encouraging more long-term rental housing.

For investors, this could change the financial equation.

A reduced tax advantage could potentially result in higher taxable income. With the same level of rental income, the net return after tax could therefore decrease for certain investments.

This could lead some investors to compare different strategies more closely: furnished rentals, unfurnished rentals, the new depreciation scheme applicable to long-term rentals, or potentially the sale of the property.

However, it would be premature to claim that this reform will result in a significant decline in rental investment. Returns also depend on the purchase price, rental income, financing costs, renovation expenses and each owner's individual tax situation.

Gifts are also part of the debate

Article 4 of the bill also proposes a specific temporary regime for certain transfers of money between generations.

One of the stated objectives is to encourage the transfer of wealth between generations. Here again, the proposal may still undergo significant changes, as amendments to this article have already been tabled.

For the real estate market, this issue is far from insignificant. A gift of cash can provide a deposit for a property purchase, finance renovation work or form part of a broader wealth-management strategy.

October will primarily be a month of amendments

The first part of the budget is due to be debated in a public session from 12 to 19 October, with a formal vote scheduled for 20 October.

This will be an important first step, but it will still not constitute the final adoption of the Finance Act.

For both individuals and real estate professionals, the right approach is therefore to follow not only the announcements, but above all the version of each provision that is ultimately voted through.

Key takeaways

• The 2027 Finance Bill contains several significant measures affecting real estate.

• The PTZ scheme could change for certain young families.

• The LMNP tax regime could become significantly more restrictive.

• Several measures relating to intergenerational wealth transfers are also under discussion.

• Nothing is final at this stage: this remains a draft law currently under parliamentary review.