Capital gains tax is one of the major costs in selling a property in France, along with the agency fee and fiscal representation. The capital gains tax is changing on an almost annual basis, therefore you should contact your Notaire when you are ready to sell for the latest information.
Capital gains is calculated ( sale price – purchase price – taxes paid – renovation costs ) x capital gains tax rate. Both the sale and purchase price are the final price written on the Acte de Vente. Taxes paid are the Notaire fees you paid upon purchasing the property, ie 7.8% of the purchase price. If you carried out extensive renovations, then if the works were done under 5 years ago then you can submit the receipts to the Notaire to be deducted (must be from work done by a registered building company). If the property was purchased 5 or more years ago then the Notaire will apply an automatic 15% of the purchase price not matter what the works cost.
Example: Mr Smith bought a property for €250,000 eight years ago, renovated it to new, and uses it as a holiday home. He has just accepted an offer of €300,000 wishes to know how much to apply capital gains to. When he bought the property he paid €17,000 in Notaire fees. As he renovated over 5 years ago he is entitled to deduct 15% hence €37,500. The total of relief is €54,500, exceeding the €50,000 of profit, therefore he pays no capital gains.
Capital gains band
If you live in France, the property can fall into two categories: primary residence, and secondary residence. For it to be your primary residence you need to be tax resident in France and have lived in your home for at least six months. In this case there is 0% capital gains no matter what the sale price. If it is a second home then the rate is 34.5% (19% capital gains tax plus 15.5% social charges).
Those living in Europe are now paying the same as a French secondary residence, ie 34.5%. The general consensus amongst EU lawyers is that charging non-residents the social charges is illegal so this may well change. There are dual-tax treaties with nearly all European countries and so you will not pay the gains twice. However as the “social charges” are not technically capital gains you need to check with an accountant in your home country if this is applicable against your domestic capital gains relief.
Non-EU residents, as of January 2015, have now been harmonized and pay the same as French and EU residents.
Capital Gains Relief
The longer you keep the property, the less capital gains tax you pay. Previously the system was simple and worked very well. Mr Francois Hollande has turned the whole French system into a confused mess, regularly changing the system and throwing in random exceptions. so please contact your Notaire for an accurate breakdown. As of 2016/2017 the relief is now divided separately into relief on the CGT and relief on the social charges element (see section above).
|Years since purchase||Relief on capital gains part|
|< 5||0 %|
|Years since purchase||Relief on social charges part|
|< 5||0 %|