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Over 60 real estate investment terms explained from A to Z. Use the search bar or alphabet navigation to quickly find a definition.
French housing allowance paid by the CAF to tenants based on income. APL impacts rental demand: an APL-eligible property attracts a wider pool of potential tenants.
Ownership without the right to use or receive income from the property (usufruct temporarily transferred). Bare ownership purchase comes with a 30-50% discount depending on dismemberment duration. At term, the bare owner recovers full ownership without additional taxation.
Tax category for furnished rental income (LMNP and LMP). BIC offers two regimes: micro-BIC (50% flat deduction) and reel regime (deduction of actual expenses + depreciation).
Maximum loan amount a borrower can obtain from a bank. Calculated based on income, existing debts, and the 35% maximum debt ratio imposed by the HCSF since 2022.
Lump sum paid to the seller at signing in a viager (life annuity) property purchase. The bouquet typically represents 20-30% of the property value. The remainder is paid as a monthly life annuity.
Short-term loan (12-24 months) allowing you to buy a new property before selling the old one. The bank advances 60-80% of the estimated value of the property to sell. Principal is repaid upon actual sale.
Financial compensation paid during property division (divorce, inheritance, exiting co-ownership). The soulte equalizes shares between parties. It can be financed by a dedicated bank loan.
Profit from property resale. Taxed at 19% (income tax) + 17.2% (social contributions) with progressive allowances based on holding period. Full exemption after 22 years for income tax and 30 years for social contributions.
Difference between rental income and all expenses (loan payment, charges, taxes, income tax). A positive cash flow means the property is self-financing. It is the key indicator to assess an investment's financial viability.
Legal regime of a building shared between several owners. Each co-owner holds a private unit and a share of common areas. Co-ownership charges are distributed according to ownership shares (tantiemes).
Situation where several people own a property together without a dedicated legal structure. Each co-owner holds a share. Major decisions require unanimity or 2/3 majority depending on the nature of the act.
Shared living arrangement with individual rooms and communal spaces (kitchen, living room, coworking). Coliving offers higher yields than traditional rental (often +30 to +50%) but requires more active management and quality furnishing.
Ratio of monthly debt payments to income. Capped at 35% in France since HCSF recommendations became binding in 2022. Includes all current loans (property, consumer, auto).
Accounting deduction of an asset's value over its useful life. In real estate: 25-30 years for the building, 5-10 years for furniture. Specific to LMNP reel and SCI subject to corporate tax (IS), depreciation reduces taxable profit without any cash outflow.
Splitting property rights into bare ownership (nue-propriete, ownership of the asset) and usufruct (right to use and collect income). A powerful estate planning technique: bare ownership value is discounted based on the usufructuary's age.
Personal financial contribution to a real estate purchase. Typically 10-20% of the purchase price, the down payment covers at least notary fees. A higher down payment allows better loan terms.
Mandatory diagnostic rating properties from A (very efficient) to G (energy sieve). Since 2025, G-rated properties are banned from rental. F-rated will follow in 2028 and E-rated in 2034.
Poorly insulated property rated F or G on the DPE. Since 2025, G-rated properties are banned from rental. Energy sieves benefit from a doubled rental deficit cap (€21,400/year instead of €10,700) for energy renovation works (until 2027).
Flat levy on capital income (dividends, interest, securities gains). Since the 2026 Social Security Financing Act, the rate is 31.4%: 12.8% income tax + 18.6% social contributions (CSG increased from 9.2% to 10.6%). Progressive scale option available if more advantageous.
Insurance protecting the landlord against unpaid rent and tenant damage. Cost: 2.5-5% of annual rent. Typically covers unpaid rent, legal fees, and damage. Cannot be combined with a personal guarantor.
Security required by the bank to secure the loan. Three main types: mortgage (hypotheque, registered on the property), lender's privilege (PPD, cheaper), and surety (guarantee organization like Credit Logement).
Tax on net real estate assets above 1.3 million euros. Progressive rates from 0.5% to 1.5%. Primary residence benefits from a 30% allowance. SCPI and SCI shares are also taxable.
Index published quarterly by INSEE, used as the basis for annual rent revision. Rent increases cannot exceed the IRL variation. During high inflation, a cap may be imposed by the government.
Financial indicator measuring the annualized return on investment accounting for all cash flows (down payment, net rents, taxation, resale). An IRR above the loan cost means the leverage effect is positive.
Corporate income tax. Reduced rate of 15% up to 42,500 EUR profit (subject to conditions), then 25% above. In an IS-taxed SCI, depreciation is deductible but capital gains are calculated on net book value.
Rental contract between landlord and tenant. Several types exist: residential lease (3-year minimum unfurnished, 1 year furnished), commercial lease (3-6-9 years), professional lease (6 years). Each type has its own termination and rent revision rules.
Using bank credit to amplify the return on equity. If the property yield exceeds the loan cost, each borrowed euro enriches the investor more than equity alone would allow.
Periodic payment (usually monthly) made by the buyer to the seller in a viager transaction, until the seller's death. The amount depends on property value, upfront bouquet paid, and seller's life expectancy.
Non-professional furnished landlord status. Two sub-regimes: micro-BIC (50% flat deduction on income up to 77,700 EUR) or reel (deduction of actual charges and depreciation). The reel regime is often more advantageous above 30-40% expenses.
Professional furnished landlord status. Conditions: furnished rental income > 23,000 EUR/year AND exceeding household's other professional income. Allows deficit deduction from global income and capital gains exemption after 5 years of activity.
Mandatory insurance covering the borrower in case of death, disability or incapacity. Since the Lemoine law (2022), the insurance can be delegated to an external insurer at any time, often at a lower rate than the bank's offer.
Simplified tax regime for furnished rental income below 77,700 EUR/year. 50% flat deduction on revenue. Simple but often less advantageous than the reel regime when actual expenses exceed 50% of income.
Simplified tax regime for unfurnished rental income below 15,000 EUR/year. 30% flat deduction. Unsuitable when there are major renovations or significant loan interest, where the reel regime enables a rental deficit.
Fixed sum paid monthly to repay a property loan. Includes a principal portion (increasing over time) and an interest portion (decreasing). Calculated from the borrowed amount, interest rate, and loan term.
Lender's security registered on the property. In case of payment default, the bank can seize and sell the property. The mortgage is released after full loan repayment, subject to release fees.
Entire building with multiple rental units owned by a single investor. Advantages: vacancy risk pooling, economies of scale on renovations, better per-sqm yield than individual unit purchases.
Non-occupant owner insurance, mandatory in co-ownership. Covers property damage (water damage, fire) and the owner's civil liability. Typical cost: €100-300/year depending on surface area and location.
Public officer responsible for authenticating real estate transactions. The notary verifies the legality of the sale, drafts the authentic deed, collects taxes, and publishes the transfer at the land registry.
Transaction costs including transfer duties, notary fees, and miscellaneous charges. Approximately 7-8% for existing properties, 2-3% for new builds. These fees are typically financed by the down payment.
Sum of future cash flows discounted at a reference rate (cost of capital). A positive NPV means the investment creates value. Together with IRR, it is the most used indicator in advanced real estate financial analysis.
Operation of selling a personally-owned property to one's own SCI. Enables cash extraction (liquidity), purging latent capital gains, and optimizing future taxation through corporate tax and depreciation.
Capped rent under the Pinel scheme, calculated by geographic zone (A bis, A, B1) and a multiplier coefficient based on surface area. The Pinel scheme ended on December 31, 2024 — existing investments continue to benefit from their tax advantages.
Set of mandatory inspections for sale or rental: DPE, asbestos, lead, termites, electricity, gas, ERP. Cost ranges from €200 to €800 depending on the number of diagnostics and property size.
Delegating rental property management to an agency: tenant search, inventory, rent collection, maintenance management. Typical cost: 6-10% of rent including charges.
Professional or volunteer responsible for day-to-day management of a co-ownership: common area maintenance, financial management, organizing general meetings. Their fees are included in co-ownership charges.
Annual local tax owed by the property owner. Calculated on cadastral rental value, it varies significantly by municipality (€500 to €3,000+/year for an apartment). A major charge in net yield calculation.
Government-backed interest-free loan for first-time buyers subject to income limits. The PTZ can finance up to 40% of the operation cost depending on geographic zone. Cannot be combined with rental investment.
Participative financing of real estate projects through specialized platforms. Typical yield of 8-12% over 12-36 months. Capital is not guaranteed and default risk exists.
Parent company holding shares in subsidiary SCIs. Enables tax optimization (parent-subsidiary regime, tax integration), facilitates estate transmission, and pools resources across structures.
Tax regime allowing deduction of actual expenses (renovations, interest, management, insurance) and depreciation (in LMNP). More complex than micro regime but often far more advantageous. Minimum 2-year commitment.
Expenses paid by the landlord but rechargeable to the tenant: water, common area maintenance, waste collection, elevator. The list is defined by decree no. 87-713.
Regulation capping rent levels in high-demand areas (Paris, Lyon, Lille, Bordeaux, Montpellier...). Rent cannot exceed an enhanced reference rent set by prefectural decree, with penalties for non-compliance. Must be checked before any rent estimation.
When deductible charges (renovation, loan interest, management) exceed rental income. The deficit can be deducted from global income up to 10,700 EUR/year (excluding loan interest). The remainder carries forward against rental income for up to 10 years.
Income from unfurnished property rental. Taxed under property income rules: micro-foncier (30% deduction) or reel regime (actual expense deduction). Not to be confused with BIC for furnished rental.
Monthly amount the investor must contribute out of pocket when cash flow is negative. A moderate savings effort (100-200 EUR/month) can be acceptable if the strategy relies on capital gains at resale.
Legal structure dedicated to holding and managing real estate. An SCI can be IR-taxed (fiscal transparency, income taxed at partner level) or IS-taxed (corporate level taxation with depreciation). Preferred tool for estate management and transmission.
Collective real estate investment vehicle ("paper real estate"). The investor buys shares and receives proportional income. Typical yield of 4-6%. Advantages: diversification, risk pooling, delegated management. Drawbacks: entry fees, limited liquidity.
Sum paid by the tenant upon moving in. Capped at 1 month's rent (excluding charges) for unfurnished, 2 months for furnished. Returned within 2 months of departure, minus any tenant repair costs.
Social contributions on investment income. Since the 2026 Social Security Financing Act, two rates coexist: 17.2% for rental income (unfurnished) and real estate capital gains (CSG 9.2% + CRDS 0.5% + solidarity 7.5%), and 18.6% for capital income (SCI IS dividends, LMNP, securities gains) — CSG increased to 10.6%.
The highest tax rate applied to your income. The 2026 brackets are: 0%, 11%, 30%, 41%, 45%. The TMI determines the tax impact of additional rental income and the value of tax optimization strategies.
Taxes collected by the state and local authorities on property transfers. They represent the bulk of "notary fees": approximately 5.80% of the price in most departments (increased to 6.32% since April 2025 in 83 departments).
Right to use a property and receive its income without owning it. Usufruct can be lifetime (viager) or temporary (fixed term, often 15-20 years in optimization structures). The usufructuary bears current charges and property taxes.
Maximum legal interest rate banks can charge on a loan. Published quarterly by the Bank of France. Includes the nominal rate, loan insurance, and all loan-related costs (APR). An APR exceeding the usury rate results in automatic loan rejection.
Percentage of time the property is unoccupied (between tenants, refurbishment). Typically 2-8% depending on location and property type. A high vacancy rate directly impacts cash flow and yield.
Property sale where the buyer pays a bouquet (lump sum) then a monthly life annuity until the seller's death. In viager occupe, the seller retains the right to live there. In viager libre, the buyer can occupy or rent the property immediately.
Annual income relative to invested capital. Several levels: gross yield (rent/price), net (after charges), net-net (after tax). A good rental yield in France typically ranges from 5-10% gross depending on city and property type.
Geographic classification of French municipalities into zones A bis, A, B1, B2 and C based on housing market pressure. Zoning determines PTZ eligibility, rent caps, and applicable tax incentives.