For years, I watched owners build their Martinique strategy on a reassuring certainty: depreciate a furnished rental under the actual-expense regime to wipe out tax on rental income, then resell without those depreciation deductions weighing on the capital gain. The 2025 Finance Act closed that loophole. From now on, selling an LMNP in Martinique and its capital gains can no longer be taken lightly: the depreciation deducted during operation now inflates the taxable capital gain on the day of the sale.
A resident of the island and a manager of furnished rentals from Sainte-Anne to Les Trois-Îlets, I see this reform changing the trade-offs. Here is how it works, updated for 2026, with a worked example based on a real Martinique case. This guide stays educational: only a notary or a chartered accountant can validate your personal calculation.
What the 2025 reform really changes for reselling an LMNP in Martinique
Before 2025, the mechanism was formidably effective. Under the actual-expense regime, you deducted an annual accounting depreciation each year (building, furniture, equipment) that sharply reduced, or even cancelled, the tax on your rental income. At resale, the capital gain was calculated on the original purchase price, without recapturing that depreciation: little tax during ownership, and a softened capital gain on exit.
The 2025 Finance Act ended this asymmetry for sales completed on or after January 1, 2025. The principle of LMNP depreciation recapture is simple: the depreciation taken now lowers the acquisition price used to calculate the capital gain. The gap between the sale price and the “adjusted” purchase price widens, so the taxable capital gain rises.
A few structural points to keep in mind:
- the reform targets the LMNP under the actual-expense regime; a property left under micro-BIC never depreciated, so it is not affected by recapture;
- the DOM property capital gain is calculated under the same rules as in mainland France: 19% income tax and 17.2% social levies, i.e. 36.2% before allowances;
- certain depreciation remains outside recapture (the portion corresponding to expenses that could have been booked as charges), hence the importance of well-kept accounts;
- the allowances for length of ownership still apply and remain your best ally on exit.
In Martinique, the reform has a particular edge. The high operating costs of the DOM (air conditioning, anti-termite treatment, recovery after the cyclone season, furniture made pricier by the octroi de mer) inflated the annual depreciation and made the actual-expense regime very attractive. This holding-phase advantage becomes, at resale, a heavier recapture base — without making the equation a losing one, provided you plan ahead.
Allowances for length of ownership: the lever that saves the exit
This is the point I hammer home with every owner: the gross capital gain is not the taxable capital gain. The system of progressive allowances erases the tax over time:
- full exemption from income tax (19%) after 22 years of ownership;
- full exemption from social levies (17.2%) after 30 years.
A furnished rental in the South held for a long time therefore sees its capital gain largely, or even entirely, relieved — recapture or not. The reform mainly penalizes quick resales (five to ten years) of heavily depreciated properties.
Worked example: reselling a furnished rental in southern Martinique
Nothing speaks better than a concrete case, on the market I know best: the Caribbean south coast.
The assumptions:
- purchase of a furnished one-bedroom flat at Le Diamant, view of the Rock, in 2017 for €200,000 (fees and works included);
- operated as LMNP under the actual-expense regime, rented during Lent and the high season, with about €6,000 of depreciation per year;
- 8 years depreciated at the time of sale, i.e. €48,000 of cumulative depreciation;
- resale in 2025 for €280,000.
Before the reform, the gross capital gain would have been 280,000 − 200,000 = €80,000.
After the 2025 reform, the acquisition price is reduced by the recaptured depreciation: 200,000 − 48,000 = €152,000. The gross capital gain becomes 280,000 − 152,000 = €128,000, i.e. €48,000 of additional base.
On this base, at 36.2% before allowances, the recapture theoretically represents roughly €17,000 of extra tax. But the length of ownership rebalances everything: at 8 years, the allowances already start to bite and the difference in tax actually paid is appreciably lower. At 22 years the “income tax” portion disappears, at 30 years the social levies too — and recapture becomes painless.
Three concrete lessons for a property in Martinique:
- the reform makes quick resales more expensive for heavily depreciated rentals: if you were planning to exit at 5 or 7 years, factor in this extra cost from the moment you buy;
- it does not undermine the value of the actual-expense regime during ownership: over 8 years, the income-tax savings from depreciation far exceed the extra capital-gains cost, especially with high DOM charges;
- it rewards long-term ownership: a furnished rental in the South, a tight market with strong demand from December to April, lends itself to a wealth strategy over 15 to 22 years.
Micro-BIC or actual-expense regime: does the reform reshuffle the deck?
Not as much as people think. The micro-BIC (a 50% allowance for a classified tourist furnished rental, 30% otherwise) escapes recapture since it does not depreciate — attractive for a short-term resale. But for a property held over the long term and generating substantial rental income during Lent, the actual-expense regime often remains the winner: depreciation neutralizes tax for 10 to 15 years, and the allowances for length of ownership absorb the recapture. The choice depends on your horizon and the amount of your rental income: a point to settle with your accountant before signing at the notary’s.
