Kees de Jager,  Wednesday, 8 November 2023

 

The sale of a property in France involves not only logistical but also fiscal obligations, such as the "plus-value," the French term for capital gains tax. This article provides an overview for owners of a second home in France who want to understand the tax they may need to pay when selling their property.

Definition of Plus-value

"Plus-value" refers to the profit made from the sale of a property: the difference between the purchase price and the selling price. In France, this profit is taxable.

Tax Rates

The capital gain is taxed at a flat rate of 19% plus 17.2% in social charges, amounting to a total of 36.2%. These rates apply to both residents and non-residents of France.

Deductions for Long-term Ownership

There is a deduction scheme for long-term ownership. From the sixth year after the purchase of the property, the taxable "plus-value" decreases each year. After 22 years, the gain is exempt from capital gains tax, and after 30 years, it is also exempt from social charges.

Additional Levies on Large Gains

For sale profits above €50,000, additional levies may apply. These start at 2% and can rise to 6% for profits exceeding €260,000.

Possible Exemptions and Reductions

Various exemptions exist, such as when the sold property is the seller's primary residence. Additionally, costs for improvements to the property can, under certain conditions, be deducted from the "plus-value."

Importance of Professional Advice

Given the complexity of French tax law, it is advisable to seek professional tax advice when selling your French property. This can help you avoid unpleasant surprises and make the most of potential tax benefits.

Selling a second home in France requires thorough preparation, particularly regarding capital gains tax. This overview provides a basic understanding, but for a detailed approach, it is advisable to consult a tax advisor specializing in French fiscal matters.