Capital gains tax rules in France
In France when you sell a property at a higher price than what you paid for it you will be subject to a tax on the capital gains unless it is your main home. This applies to land as well as buildings and the same tax applies if it is sold as part of an SCI.
This capital gains also applies to the sale of “usufruit” as well as the “nue-propriete”, sales of “viagers”, exchanges of property etc.
The amount of capital gains is calculated simply by subtracting the purchase price (including notaire fees, agency fees, pro rata of any taxe fonciere paid and any other connected fees) from the sales price. Any improvements made to the property may in certain circumstances also be deducted but this would have to be checked with the notaire and they must be undertaken by a company and not personally in order for them to be considered to be taken into account.
Capital gains tax in France is currently 19% and once the amount of the capital gains tax due is clear you can calculate how much this can be reduced by depending on how long you have owned it. From the 6th year to the 21st year of ownership inclusive you can reduce the amount due by 6% per year and by 4% in the 22nd year so that by the end of your 22nd year of ownership there is no capital gains tax due.
There is also a social charge of 15.5% and this can also be reduced by 1.65% from the 6th to the 21st year inclusive and then by 1.6% for the 22nd year and then 9% from year 23 to 30 so that by the end of 30 years there are no longer any social charges to pay. Below is a summary of the various reductions you can apply:
|Duration||Reduction in capital gains tax||Reduction in social charges|
|Less than 6 years||0%||0%|
|From the 6th to the 21st year||6%||1.65%|
|From the 22nd year||No charge||9%|
|From the 30th year||No charge||No charge|
A seller makes 30,000 Euros in capital gains on a house that he has owned for 15 years. He reduces the tax due by:
Capital gains: 60% (10*6%) on the tax due of 19%. So the capital gains tax due is 40% of 30,000*19% which equals 2,280 Euros.
Social charges: 16.5% (10*1.65%) on the tax due of 15.5%. So the social charges due are 83.5% of 30,000 which equals 3,882.75 Euros.
The total amount due then is 6,162.75 Euros.
NB: If you re-invest the capital gains made into buying your main home within 2 years then you are exonerated of the capital gains tax due on condition that you haven’t owned your main home within the last 4 years. If you are a non-resident then you also don’t pay capital gains on the first 15,000 Euros of capital gains made.