Real Estate Capital Gains Tax

Everything You Need to Know About Taxation on Capital Gains When Selling a Property

Capital gains tax is an important consideration for most property owners who decide to sell their real estate. This is due to the fact that the value of French property traditionally appreciates over the long term, especially in highly sought-after coastal regions such as the French Riviera.

Below is a clear and detailed explanation of the subject: the applicable tax rates, the exemptions you may be eligible for, how the notary calculates the tax, and the actual amount you will pay when selling your apartment or villa.

French law provides several situations where real estate capital gains tax is fully exempt.

3.1. Sale of the Primary Residence

For French tax residents:

• The sale of the primary residence and its dependencies (garage, parking, cellar, etc.) is fully exempt from capital gains tax and social contributions, regardless of the duration of ownership.

• The property must be the primary residence at the time of sale (specific rules may apply in cases of divorce or separation, but the principle remains the same).

For non-residents who previously lived in France:

4. Resident vs. Non-Resident: Impact on Taxation

4.1. French Tax Resident

You are considered a tax resident in France if, in simplified terms:

• your primary home or the center of your economic or family interests is located in France, or

• you spend more than 183 days per year in France (or more than in any other country).

A French tax resident declares all worldwide income, including certain capital gains realized on foreign properties, unless a tax treaty allocates taxation exclusively to the country where the property is located.

4.2. Non-Resident

A non-resident is taxable in France only on income and capital gains sourced in France, meaning that the real estate is located in France.

5. How Capital Gain Is Calculated: Three Steps

Step 1 : Determine the Gross Capital Gain

This is the basic difference between the sale price of the property and its actual acquisition cost.

The formula is straightforward: 

Gross Capital Gain = Adjusted Sale Price – Adjusted Purchase Price

1) Adjusted Sale Price

The calculation starts with the price stated in the notarial deed, but this amount can be slightly reduced if certain sale-related expenses are justified, such as:

• mandatory property inspections,

• agency commission (if paid by the seller),

• various indemnities or compensations.

2) Adjusted Purchase Price

The calculation includes:

• the actual purchase price stated in the deed, or

• the declared value in the case of inheritance or a gift.

To this base, certain expenses are added:

Acquisition Costs

• either the actual expenses supported by receipts,

• or a flat-rate allowance of 7.5 %, which is the most common method.

Renovation Costs

Only works that alter the property (rehabilitation, improvement, or extension) are taken into account:

• either based on actual invoices from certified companies,

• or a flat-rate 15 % allowance if the property has been owned for more than 5 years, even without invoices.

Additional costs that may also be included: connection to utilities, land development, and similar expenses.

Example

• Purchase of an apartment: €300 000

• Acquisition costs (flat 7.5 %): +€22 500

• Renovation costs (property held for more than 5 years, flat 15 %): +€45 000

Final acquisition price:

300 000 + 22 500 + 45 000 = €367 500

If the apartment is sold for €450 000, then:

Gross Capital Gain = 450 000 – 367 500 = €82 500

To make the calculation easier, you can use a capital gains tax calculator.

Step 2 : Ownership Duration Allowances

French law encourages long-term property ownership: the longer you hold a property, the smaller the taxable base becomes.

It is important to note that allowances differ for income tax and social contributions.

Allowances by Ownership Duration

Summary:

• For income tax (19 %), the property is exempt after 22 years of ownership.

• For social contributions (17.2 %), exemption applies after 30 years of ownership.

Step 3 : Applying Rates — Tax, Social Contributions, and Additional Tax

After applying all possible allowances and exemptions, you obtain the taxable capital gain, which is subject to the following taxation:

• Income Tax: 19 %,

• Social Contributions: 17.2 % for residents and most non-residents (details below),

• Additional Tax on High Capital Gains if the net gain exceeds €50 000.

Additional Tax on High Capital Gains

If the taxable capital gain after allowances exceeds €50 000 per seller, a progressive additional tax from 2 % to 6 % applies. The formula includes a slight reduction in transitional brackets, but simplified:

• €50 001 – €60 000: approximately 2 %

• €60 001 – €100 000: 2 %

• €100 001 – €150 000: approximately 3 %

• €150 001 – €200 000: approximately 4 %

• €210 001 – €250 000: approximately 5 %

• Over €260 000: 6 %

The notary performs the exact calculation using the official form n°2048-IMM-SD.

6. Residents vs. Non-Residents: Rates and Social Contributions 

For foreign clients, the key question is: how much will they pay as a non-resident, and how does it differ from a French resident?

6.1. General Rule

For income tax (19 %), residents and non-residents are taxed in the same way. Differences mainly appear regarding social contributions.

6.2. Social Contributions for Non-Residents from the EU/EEA/Switzerland

For individuals who:

• reside in an EU/EEA country or Switzerland, and

• are subject to the mandatory social security system of that country,

the following applies:

• Exemption from CSG and CRDS on French capital gains,

• Payment of a solidarity contribution of 7.5 % instead.

Total burden: 19 % (income tax) + 7.5 % (solidarity contribution) = 26.5 %

6.3. Social Contributions for Other Non-Residents and French Residents

• French residents, as well as non-residents not eligible for the preferential regime, pay the full social contributions rate: 17.2 %.

Total burden: 19 % + 17.2 % = 36.2 % (before applying ownership duration allowances).

7. Specific Rules for Non-Residents

7.1. General Principle

Non-residents selling property in France are subject to Article 244 bis A of the French General Tax Code (CGI). The tax is calculated by the notary and automatically withheld at the time of signing the deed, so the seller receives the sale proceeds net of tax.

7.2. Tax Representative

In certain cases, a non-resident must appoint a tax representative, responsible for verifying the accuracy of the calculation with the French tax authorities.

Summary:

• EU/EEA citizens are almost always exempt from this requirement.

• Non-residents from other countries may be required to appoint a tax representative depending on the transaction amount or the size of the capital gain.

• The notary automatically assesses whether a representative is needed and arranges the appointment if required.

8. Who Handles the Calculation and Declarations

8.1. Role of the Notary

During the transaction, the French notary:

• verifies the applicability of exemptions (primary residence, ownership duration, benefits for non-residents, etc.);

• calculates the taxable capital gain as well as the amount of tax and social contributions;

• completes form n°2048-IMM-SD (or the specific form for building plots);

• withholds the tax and social contributions directly from the sale price and remits them to the tax authorities upon registration of the transaction.

8.2. Reporting in the Annual Tax Return

Even if the tax has already been paid through the notary, the seller must:

• report in their annual income tax return the capital gain amount declared by the notary;

• if applicable, also indicate any exempt capital gain, for example, in the case of an exemption for the purchase of a first primary residence that is not the current primary residence.

A capital gains tax calculator can be used to estimate the amount payable.

9. Practical Advice for Property Owners

1. Keep records of all renovation work — it’s your money
If you have carried out renovations, reconstructions, or extensions through contractors, make sure to keep all invoices. Actual expenses are often more advantageous than the standard 15 % flat-rate allowance.

2. Plan ahead for the property’s status
If you truly occupy the property, it is advisable to officially declare it as your primary residence. This allows you to benefit from full capital gains tax exemption upon sale.

3. Ownership duration matters
The 22-year threshold grants exemption from income tax (19 %), and 30 years for all social contributions. Sometimes it may be beneficial to slightly delay the sale to take advantage of full exemption.

4. Non-residents must confirm their social security status
EU/EEA and Swiss citizens, covered by their mandatory social system, can benefit from reduced social contributions of 7.5 % instead of 17.2 %. Supporting documents are required to apply this regime.

5. Consider international tax treaties
France has signed treaties with several countries to avoid double taxation. In some cases, tax paid in France can be credited in the country of residence.

6. Consult a professional before listing the property
If you are a non-resident or the ownership structure is complex (inheritance, SCI, usufruct, etc.), it is recommended to discuss your situation with a notary and, if necessary, with a tax advisor, especially for international transactions.

7. Perform a preliminary tax calculation before listing
Before setting the price and putting the property on the market, it is useful to know the expected capital gains tax. This allows you to estimate the net proceeds from the sale and avoid unpleasant surprises. A notary or tax advisor can provide a realistic estimate of the net amount you will receive.

10. Important Notice

• The rules presented in this article are based on official sources: Service-Public (information on capital gains tax, updated 2025), documents from impots.gouv.fr, as well as the applicable articles of the French General Tax Code (CGI, notably art. 244 bis A).

• Tax legislation may change and can vary significantly depending on the seller’s specific situation (family status, country of residence, ownership of other properties, income level, etc.).

This article is for informational purposes only and does not replace personalized advice from a notary or tax advisor.

The experts at Property Service Azur assist you not only with the purchase of real estate but also with tax optimization, income declaration, and management of your property portfolio.