TLDR: In France, capital gains on real estate are taxed differently depending on the seller's tax residency and the type of property. Tax residents are subject to a 19% income tax, while non-residents are subject to a flat-rate tax and social contributions. Exemptions and reductions apply under specific conditions.
Who is subject to taxation?
Tax residents in France
Tax residents in France are subject to a 19% income tax on capital gains from onerous real estate transactions. This tax applies only to onerous transfers, excluding donations and inheritances. Exemptions exist, such as for the primary residence, provided the property was not rented out in the years preceding the sale.
Non-tax residents
Non-tax residents are subject to a flat-rate levy on capital gains from French real estate. This levy applies to non-resident individuals, foreign-based companies, and French companies with non-resident shareholders. The flat-rate levy is subject to international tax treaties that may alter rates or taxation methods.
Which properties are taxable?
The following are subject to taxation:
- Built or undeveloped properties located in France, including real estate rights.
- Shares in real estate-dominated companies (SPI) when the seller is a non-resident.
- Buildable land, even without construction.
The following are exempt from taxation:
- The seller's primary residence, under specific conditions.
- Capital gains on properties where the total real estate assets do not exceed €61,000.
How to calculate taxable capital gains?
Gross capital gains are calculated as the difference between the sale price (minus selling expenses) and the purchase price (plus acquisition costs and improvement expenses). This amount can be reduced by:
- A reduction for holding period: 5% for each year beyond the second.
- A fixed reduction of €915 on the annual total of capital gains.
What are the applicable rates?
For tax residents
- Income tax: 19%.
- Social contributions: applicable rates (CSG, CRDS, solidarity levy).
For non-residents
- Flat-rate levy: variable rate depending on tax treaties.
- Social contributions: standard flat rate, reduced to 7.5% for non-residents covered by EU Regulation 883/2004.
- Tax on high capital gains: applies to the portion exceeding a certain threshold.
Declaration obligations
Even in cases of exemption, specific declaration obligations may apply. For non-residents, the declaration and payment of the flat-rate levy must be completed at the time of the transfer, typically through a tax representative in France or directly with the tax authorities.