Paris, the 28th of September 2026
🚨 The 60% Depreciation Clawback: What Changed in 2026?
On January 1, 2026, France’s Finance Act introduced a pivotal change to LMNP taxation: 60% of accumulated depreciation deductions now become taxable income upon resale. This rule fundamentally alters the economics of nursing home investment exits and demands immediate attention from LMNP investors holding EHPAD assets.
Key Statistic: The Tax Impact
For a typical nursing home investment:
– Annual depreciation deduction: €100,000
– Holding period: 10 years
– Total accumulated depreciation: €1,000,000
– Taxable clawback (60%): €600,000
– Tax liability at 30% combined rate: €180,000
This represents a 36% reduction in net proceeds compared to pre-2026 rules—a material impact that reshapes investment returns and exit timing decisions.
Q&A: Understanding the 2026 LMNP Tax Reform
Q1: Why Did France Introduce the 60% Depreciation Clawback?
A: The French government implemented this change to address two fiscal concerns:
1. Revenue optimization: Depreciation deductions had reduced LMNP tax revenues by an estimated €2-3 billion annually. The clawback recovers approximately 40% of this foregone revenue.
2. Equity concerns: Policymakers argued that LMNP investors received disproportionate tax benefits compared to unfurnished rental (SCI) investors, who cannot deduct depreciation. The clawback narrows this gap.
3. Inflation adjustment: With property values rising 15-20% since 2020, depreciation deductions had become increasingly generous relative to actual economic wear-and-tear.
Source: French Finance Ministry, 2026 Budget Justification; Capifrance LMNP Guide 2026
Q2: How Does the 60% Clawback Actually Work?
A: The mechanism is straightforward but consequential:
Step 1: Calculate accumulated depreciation
– Sum all annual depreciation deductions claimed during ownership
– Example: €100k/year × 10 years = €1,000,000 total
Step 2: Apply 60% clawback
– €1,000,000 × 60% = €600,000 becomes taxable income
Step 3: Calculate tax liability
– €600,000 × 30% combined rate (12.8% income tax + 17.2% social contributions) = €180,000
Step 4: Reduce net proceeds
– Sale price: €500,000
– Capital gains tax (on €100k appreciation): €30,000
– Depreciation clawback tax: €180,000
– Net proceeds: €290,000 (vs. €470,000 under pre-2026 rules)
Important: The clawback applies to all accumulated depreciation, regardless of when it was claimed. Investors who deducted depreciation in 2015-2025 face clawback on those deductions upon 2026+ sales.
Source: Hayot Expertise LMNP Taxation Guide 2026; French Tax Code (Article 151 septies)
Q3: Does the Clawback Apply to All LMNP Investors?
A: No. The clawback applies only to investors using the « réel » (actual) tax regime. Investors in the micro-BIC regime are exempt.
Comparison:
– Micro-BIC: <€23,000 annual receipts, no depreciation deduction allowed, no clawback on sale, low tax complexity
- Réel: >€23,000 annual receipts, depreciation deduction allowed, 60% taxable on sale, high tax complexity
Implication for investors: Small LMNP portfolios (1-2 properties) may benefit from micro-BIC status, which avoids the clawback entirely. However, micro-BIC investors cannot deduct operating expenses, creating a trade-off.
Example:
– Micro-BIC investor: €50,000 annual rental income, no deductions, €15,000 tax (30%), no clawback on sale
– Réel investor: €50,000 annual rental income, €20,000 deductions (depreciation + expenses), €9,000 tax (30% on €30k), but €12,000 clawback on sale (60% × €20k depreciation)
Source: Lodgis LMNP 2026 Guide; French Tax Administration (Impôts.gouv.fr)
Q4: What’s the Impact on Resale Timing?
A: The clawback creates a « sell now vs. wait » dilemma for LMNP investors:
Scenario A: Sell in 2026 (before further tax changes)
– Clawback applies at current 60% rate
– Property values stable or declining (French real estate down 2.5% YoY)
– Financing costs high (3.2-3.4% mortgage rates)
– Decision: Sell if property is underperforming or operator risk is elevated
Scenario B: Hold and sell in 2027-2028
– Clawback rate may increase (government may raise to 70-80% to boost revenue)
– Property values may recover if rates decline
– Accumulated depreciation continues to grow (increasing clawback liability)
– Decision: Hold only if operator is strong and occupancy is rising
Quantitative analysis:
– Holding 1 more year: Additional €100k depreciation = €60k clawback = €18k additional tax
– Property appreciation needed to justify holding: >3.6% annual appreciation (to offset €18k tax on €500k asset)
– Current French EHPAD market: 0-2% appreciation expected in 2026-2027
Conclusion: For most investors, selling in 2026 is preferable to holding, unless the operator is demonstrating exceptional performance (occupancy >90%, rent growth >3%).
Source: Banque de France Real Estate Market Report (September 2026); Capifrance Market Analysis
Q5: Can Investors Minimize the Clawback Through Structuring?
A: Yes. Several strategies can reduce or defer tax liability:
Strategy 1: Sale-Leaseback Structure
Mechanism:
– Sell the property to an institutional buyer (e.g., Welltower, Icade)
– Simultaneously sign a long-term lease (15-20 years) with the operator
– Investor becomes tenant, not owner
Tax benefit:
– Clawback applies only to depreciation claimed while owner
– Depreciation deductions cease after sale
– Investor avoids future clawback on post-sale appreciation
Example:
– Sell €500k property with €1M accumulated depreciation
– Clawback: €600k × 30% = €180k tax
– But: Lease income is taxed as ordinary income (no clawback)
– Net benefit: Defer clawback by 5-10 years; convert capital gains to rental income
Drawback: Institutional buyers demand 4.5-5.5% cap rates, reducing sale price by 10-15%
Source: Apromeos LMNP Structuring Guide; French Tax Administration
Strategy 2: Depreciation Acceleration (Before 2027)
Mechanism:
– Claim maximum allowable depreciation in 2026 (before potential rate increase)
– Front-load deductions to reduce taxable income now
– Accept higher clawback in 2027+ (but at known 60% rate, not higher future rates)
Tax benefit:
– Lock in 60% clawback rate before potential increase to 70-80%
– Reduce 2026 taxable income by €50-100k
– Defer sale to 2027-2028 when rates may have stabilized
Example:
– 2026: Claim €150k depreciation (vs. normal €100k), reduce taxable income by €50k, save €15k tax
– 2027: Sell with higher accumulated depreciation, but at locked-in 60% rate
– Net benefit: €15k tax savings in 2026 + certainty on future clawback rate
Drawback: Requires advance planning; may trigger audit if depreciation claims appear aggressive
Source: Hayot Expertise Tax Planning Guide; French Tax Code (Article 39 C)
Strategy 3: Micro-BIC Conversion (For Small Portfolios)
Mechanism:
– Restructure portfolio to keep annual receipts below €23,000
– Elect micro-BIC regime (no depreciation deductions, but no clawback)
– Sell under micro-BIC status (no clawback on sale)
Tax benefit:
– Eliminate clawback entirely
– Simplify tax filing (no detailed expense tracking)
– Reduce audit risk
Example:
– Current portfolio: 2 properties, €60k annual rental income, €20k depreciation, €18k clawback on sale
– Restructured: Sell 1 property, keep 1 property with €22k annual income
– Elect micro-BIC: €22k income, €6,600 tax (30%), €0 clawback on future sale
– Net benefit: Eliminate €18k clawback; trade-off: cannot deduct €20k annual expenses
Drawback: Requires portfolio restructuring; may not be feasible for large investors
Source: Lodgis LMNP 2026 Guide; French Tax Administration
By the Numbers: Tax Impact Scenarios
Small EHPAD (Micro-BIC): €300,000 property value, €0 accumulated depreciation, €0 clawback tax, €9,000 capital gains tax, €9,000 total tax, €291,000 net proceeds
Mid-size EHPAD (Réel, 5 years): €500,000 property value, €500,000 accumulated depreciation, €90,000 clawback tax, €30,000 capital gains tax, €120,000 total tax, €380,000 net proceeds
Large EHPAD (Réel, 10 years): €1,000,000 property value, €1,000,000 accumulated depreciation, €180,000 clawback tax, €60,000 capital gains tax, €240,000 total tax, €760,000 net proceeds
Portfolio (3 properties, Réel): €1,500,000 property value, €1,500,000 accumulated depreciation, €270,000 clawback tax, €90,000 capital gains tax, €360,000 total tax, €1,140,000 net proceeds
Key insight: Tax liability scales with holding period and accumulated depreciation. Investors holding 10+ years face 15-20% effective tax rates on sale proceeds.
Investor Impact: Resale Liquidity & Valuation
How the Clawback Affects Buyer Behavior
Buyer perspective:
– Institutional buyers (Welltower, Icade, Clariane) factor clawback into acquisition models
– They discount offers by 3-5% to account for seller’s tax liability
– Sellers must negotiate aggressively or accept lower valuations
Example:
– Pre-2026 market: €500k EHPAD sells for €500k (buyer assumes seller nets €470k after capital gains tax)
– Post-2026 market: Same €500k EHPAD sells for €475k (buyer assumes seller nets €295k after clawback + capital gains tax)
– Seller haircut: €25,000 (5%)
Resale Liquidity Implications
Short-term (2026-2027):
– Increased seller motivation (clawback creates urgency)
– Buyer caution (tax complexity deters some buyers)
– Result: Wider bid-ask spreads, longer time-to-sale (90-120 days vs. 60 days pre-2026)
Medium-term (2027-2028):
– Market adjusts to new tax regime
– Valuations stabilize at 3-5% discount to pre-2026 levels
– Result: Normalized transaction volumes, but permanently lower valuations
Long-term (2029+):
– Clawback becomes standard market assumption
– New investors factor clawback into purchase models
– Result: Stable valuations, but 5-8% lower than 2024 peaks
Quick Check: Should You Sell Your EHPAD in 2026?
Use this checklist to decide:
– Operator risk: Is your operator’s occupancy declining (<85%)? → SELL NOW
- Lease indexation: Is your lease indexed to inflation (IPC)? → HOLD (benefit from inflation pass-through)
- Property condition: Does the property need €50k+ in capex in next 2 years? → SELL NOW
- Financing: Is your mortgage rate >3.5%? → CONSIDER SELLING (refinance risk)
– Tax regime: Are you in réel regime with >€500k accumulated depreciation? → SELL NOW (minimize clawback)
– Market outlook: Do you expect French EHPAD valuations to rise >3% in 2027? → HOLD
Scoring:
– 4+ « SELL NOW » checks: Sell in Q4 2026 before year-end
– 2-3 « SELL NOW » checks: Evaluate sale vs. hold based on operator performance
– 0-1 « SELL NOW » checks: Hold and monitor; reassess in Q2 2027
Market Alert: Potential Tax Changes in 2027
Risk to monitor:
The French government may increase the clawback rate from 60% to 70-80% in 2027 to boost revenue. This would:
– Increase tax liability by €60-120k on typical €1M depreciation
– Accelerate seller motivation (rush to sell in 2026)
– Further compress valuations
Recommendation: If you’re considering a sale, lock in 2026 pricing before potential 2027 rate increase.
Expert Opinion: Tax Planning in the New Regime
« The 60% depreciation clawback fundamentally changes LMNP investment economics. Investors who held properties for 10+ years and claimed maximum depreciation face significant tax surprises. The key is advance planning: either restructure to micro-BIC status, accelerate depreciation claims in 2026, or consider sale-leaseback structures. Waiting for rates to decline is no longer a viable strategy—tax liability grows with every year of holding. »
— Tax Advisor, Hayot Expertise
Glossary: Key LMNP Tax Terms
– LMNP (Location Meublée Non-Professionnelle): Non-professional furnished rental status for investors with <€23k annual receipts or secondary activity - Réel regime: Actual tax regime allowing depreciation deductions and expense deductions - Micro-BIC: Simplified tax regime for small furnished rentals (<€23k receipts); no depreciation deductions - Depreciation clawback: 60% of accumulated depreciation becomes taxable income upon resale (new in 2026) - Capital gains tax: 12.8% income tax + 17.2% social contributions = 30% total on property appreciation - IPC (Indice des Prix à la Consommation): Consumer Price Index; used for lease indexation clauses - Sale-leaseback: Investor sells property to institutional buyer, then leases it back from buyer Actionable Conclusion: Your Next Steps If you own an EHPAD investment: 1. Calculate your clawback exposure: Sum all depreciation deductions claimed since purchase. Multiply by 60%, then by 30% to estimate tax liability. 2. Evaluate your operator: If occupancy is declining or lease renewal is approaching, prioritize sale in 2026 to avoid clawback. 3. Consult a tax advisor: Explore micro-BIC conversion, depreciation acceleration, or sale-leaseback structures tailored to your situation. 4. Monitor 2027 tax changes: If government increases clawback rate, accelerate your sale timeline. 5. Benchmark your valuation: Compare your property's current market value to pre-2026 peaks. If discount >5%, negotiate aggressively with buyers.
Ready to Optimize Your EHPAD Exit?
EHPAD INVEST provides independent tax scenario modeling, buyer matching, and strategic guidance for nursing home resales. We help investors navigate the 2026 tax changes, minimize clawback exposure, and maximize net proceeds.
Get a free tax impact assessment and resale valuation:
– Email: [email protected]
– Phone: +33 977 216 918
– Website: www.ehpad-invest.fr
Sources & Further Reading
1. French Finance Act 2026 (Article 151 septies): https://www.legifrance.gouv.fr
2. Capifrance LMNP Investment Guide 2026: https://www.capifrance.fr/en/blog/guide-to-lmnp-investment-in-2026-in-france
3. Hayot Expertise LMNP Taxation Guide 2026: https://hayot-expertise.fr/en/blog/lmnp-taxation-france-2026-guide
4. Lodgis LMNP 2026 Complete Guide: https://www.lodgis.com/en/owners/helpful-hints/lmnp-2026-complete-guide/
5. Banque de France Real Estate Market Report (September 2026): https://www.banque-france.fr
6. EHPAD Magazine: LMNP Tax Reform 2026: https://www.ehpad-magazine.com/lmnp-tax-reform-2026-how-frances-60-depreciation-clawback-reshapes-nursing-home-investment-yields/
7. French Tax Administration (Impôts.gouv.fr): https://www.impots.gouv.fr
8. Apromeos LMNP 2026 Tax Changes: https://www.apromeos.com/en/lmnp-2026-changements-fiscaux/
Pour lire plus d’articles d’actualités EHPAD, consultez notre section Actualités: https://www.ehpad-magazine.com/actualites/
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