TLDR: No capital gains tax exemption is provided for non-professional furnished rental operators (LMP). For professional furnished rental operators (LMP), exemption is possible under strict conditions (Art. 151 septies of the French Tax Code - CGI), but it explicitly excludes direct or indirect rental of furnished residential premises or premises intended to be let furnished.
Fundamental distinction between non-professional and professional LMPs
Non-professional furnished rental operators (LMP) can never benefit from a capital gains tax exemption. Their gains are systematically subject to the private capital gains tax regime (Art. 150 U and 150 VH of the CGI).
Conditions for professional LMPs
The capital gains tax exemption for professional furnished rental operators (LMP) is governed by Article 151 septies of the CGI. It requires the cumulative fulfillment of the following conditions:
- The activity must be carried out on a professional basis for at least five years.
- Compliance with annual revenue thresholds (€90,000 for full exemption or €126,000 for partial exemption, excluding residential rental).
Explicit exclusion of furnished residential rental
Article 151 septies of the CGI explicitly excludes from exemption the capital gains realized upon the sale of furnished residential premises or premises intended to be let furnished, even if the activity is carried out on a professional basis.
Regime applicable to non-professional LMPs
The capital gains of non-professional LMPs fall exclusively under the private capital gains tax regime (Art. 150 U and 150 VH CGI). No provision provides for an exemption for this category.
Special cases and limits
Professional LMPs may benefit from other exemption schemes (e.g., contributions or business transfers, Art. 151 octies, 151 septies A, 238 quindecies CGI), provided that the real estate assets are not concerned for the last two schemes.
Summary of regimes
- Non-professional LMPs: Capital gains taxable under the private individuals' regime (Art. 150 U and 150 VH CGI).
- Professional LMPs: Possible exemption under conditions (Art. 151 septies CGI), except for furnished residential rental.