Capital gains tax on property in France

When you sell a property in France, it is important to understand how the capital gain is calculated. The gain is the difference between the sale price of your property and its acquisition price. In this article, we guide you through the essentials of the calculation so that you can anticipate the financial side of your sale.

1. Acquisition price: the acquisition price is what you paid for the property. It includes not only the purchase price but also the notaire fees and duties (or a flat 7.5%), and the cost of works, or a flat 15% after five years of ownership. Keep the receipts for these expenses so that they can be included in the calculation.
2. Sale price: the sale price is the amount for which you sell the property, as actually paid by the buyer, which may differ from the initial asking price. It is the starting point of the calculation.
3. Allowances for length of ownership: in France, the capital gain benefits from allowances for length of ownership. The longer you own the property, the larger the allowances. For income tax, the allowance is 6% a year from the 6th to the 21st year and 4% in the 22nd year, giving full exemption after 22 years. For social charges, it builds up more slowly, giving full exemption after 30 years. Specific rules apply to the sale of a main residence.
4. Net capital gain: you subtract the acquisition price, increased by the costs, from the sale price, then apply the allowances. The net gain is the amount on which you will be taxed.
5. Tax on the gain: the capital gain is subject to income tax at 19% and to social charges at 17.2%, i.e. 36.2% in total before allowances. A surcharge of 2% to 6% applies to net gains above €50,000. After 22 years of ownership only social charges remain due, and after 30 years the gain is fully exempt.
6. Exemptions: some cases give a full or partial exemption, including the sale of your main residence, under certain conditions, or the sale of a property owned for more than 30 years. It is worth checking the specific cases of exemption to optimise your tax position.

Calculating the capital gain is an essential part of selling a property in France. Understanding its components lets you anticipate the financial side of your transaction, from the acquisition price to the sale price, the allowances for length of ownership and your tax obligations.

At Story’s, we know that calculating the capital gain can be complex. Our team is here to support you throughout your sale: valuing your property, understanding the financial implications of the sale and getting the best from it.

Do contact us for a personal consultation. Whether you have questions about the capital gains calculation, your tax obligations or how to make the most of your sale, our team is here to guide you.