When selling real estate in France, the prospect of making a financial gain is always exciting, but it comes with a complex tax system that you must master. Property capital gains tax—which corresponds to the positive difference between the sale price and the purchase price of a property—is subject to income tax and social security contributions. Between allowances for the duration of ownership, multiple cases of exemption, and rigorous administrative procedures, optimizing your property tax requires specialized expertise. This comprehensive guide gives you all the keys to calculate your capital gains, identify your rights to exemptions, and secure your transaction in full compliance with French law.
Property capital gains (plus-value immobilière) refers to the profit made during the sale for valuable consideration of real estate (apartment, house, land) or real property rights (such as usufruit [usufruct/right of use] or nue-propriété [bare ownership]). Under Article 150 U of the Code général des impôts (CGI / French General Tax Code), this capital gain is subject to a flat-rate tax, unless the seller can claim a specific exemption.
It is important to distinguish the gross capital gain (plus-value brute), which is the simple mathematical difference between the sale price and the acquisition price, from the net capital gain (plus-value nette), which constitutes the actual tax base after applying legal adjustments and allowances for the duration of ownership.
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To determine the tax base, the French tax administration allows adjustments to the purchase and sale prices to reflect the economic reality of the investment.
The sale price used is the one stipulated in the acte notarié (notarial deed). However, this price can be reduced by disposal costs justified by the seller. These notably include:
The initial purchase price is increased by several legal adjustments that artificially reduce the taxable capital gain:
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French tax law rewards long-term ownership. The longer you keep a property, the less the residual capital gain is taxed. However, the reduction rates differ between income tax (at a rate of 19%) and social security contributions (at a rate of 17.2%).
The allowance applies from the sixth year of ownership according to the following scale:
The reduction rate is more gradual and requires a longer ownership period:
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To illustrate this mechanism, let us look at the case of Jean.
Example: In 2024, Jean sells a rental apartment that he purchased in March 2012 (representing 12 full years of ownership).
Calculation of the adjusted acquisition price:
Gross capital gain:
Application of allowances for 12 years of ownership:
Total taxation for Jean: 7,245.65 € + 10,002.81 € = 17,248.46 € (on an actual gross profit of 100,000 €).
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French tax law provides several grounds for total or partial exemption from capital gains tax, regardless of the duration of ownership.
Under Article 150 U, II-1° of the CGI, the sale of the seller's primary residence (résidence principale) on the day of the sale is completely exempt from income tax and social security contributions. This exemption extends to immediate and necessary outbuildings (such as a garage or adjoining garden) sold simultaneously.
Note for non-residents: Specific rules apply to people leaving France. The exemption can be maintained if the property is sold within a reasonable timeframe (generally deemed up to one year by case law) after departure, provided that the accommodation has remained vacant since the owner's departure.
Article 150 U, II-1° bis of the CGI allows for an exemption on the first sale of a secondary residence or a rental property, under strict conditions:
If the sale price of the property (or the share of ownership) is less than or equal to 15,000 €, the capital gain is fully exempt. This threshold is assessed per transferee and for each property individually.
People who sell real estate and who hold a retirement pension or a disability card can be exempt if their resources from the penultimate year (N-2) do not exceed a certain revenu fiscal de référence (RFR / reference fiscal income) threshold, and if they are not liable for the impôt sur la fortune immobilière (IFI / property wealth tax).
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Since 2013, a progressive surtax applies to property capital gains (other than on building land) that exceed 50,000 € after applying the allowances for the duration of ownership.
The scale of this surtax varies from 2% to 6%:
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The declaration and payment of property capital gains tax are entirely secured and centralized by the professionals handling the deed.
1. Gathering supporting documents: As soon as the property is put up for sale, gather the initial property deed, invoices for improvement work carried out by professionals, and receipts for acquisition costs if you opt for actual costs.
2. Calculation by the notary: The notaire (notary) in charge of the sale drafts the deed and calculates the precise amount of taxable capital gains, allowances, and taxes due using administrative form No. 2048-IMM (or 2048-TAB for land).
3. Withholding at source: Upon signing the acte authentique de vente (binding deed of sale), the notary directly deducts the tax amount from the sale price. You thus receive the price net of tax.
4. Payment to the tax office: The notary registers the deed and directly remits the withheld tax to the Service de la Publicité Foncière et de l'Enregistrement (SPFE / Land Registry and Registration Service) within the month following the sale.
5. Annual tax declaration: The year following the sale, you must report the calculated capital gains amount (indicated on the deed) on your global income tax return (form No. 2042-C), so that this amount is taken into account when calculating your reference fiscal income (RFR), even though the tax has already been paid.
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Yes, building lands benefit from the allowances for duration of ownership leading to exemption from income tax after 22 years and social security contributions after 30 years. However, they do not benefit from certain temporary exceptional allowances sometimes voted by the legislature to stimulate housing construction, and they are excluded from the exemption for the first sale of a property other than the primary residence.
Non-residents are subject to the same flat-rate income tax of 19%. For social security contributions, if they are affiliated with a social security scheme of an EU/EEA state or Switzerland and are not dependent on a compulsory French scheme, they are exempt from CSG and CRDS and only pay the solidarity contribution at the reduced rate of 7.5% (instead of 17.2%).
The transfer of a property by death (inheritance) or during one's lifetime (donation) is not subject to property capital gains tax. These transactions "wipe out" the latent capital gain. For future calculations in the event of resale by the heir or donee, the acquisition value used will be the one declared in the deed of donation or inheritance, and not the initial purchase price of the deceased or donor.
In principle, capital losses suffered by individuals during the sale of a property are not deductible from capital gains made on other property sales. Nor can they be carried forward to subsequent years, except in the very specific case of selling blocks of buildings acquired in successive fractions.
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Legal information for guidance only, not personalised legal advice. For your specific situation, ask your question free of charge on AvocatAI — answers based on French law, in your language.