Tax Information for Buying a House in France
Kees de Jager, Thursday, 25 July 2024
When buying a property in France, you will encounter various taxes and levies. Here is an overview of the main taxes you need to consider:
1. Notary Fees (Frais de Notaire)
2. Registration Tax (Droits de Mutation)
3. Property Tax (Taxe Foncière)
4. Residence Tax (Taxe d'Habitation)
5. Wealth Tax (Impôt sur la Fortune Immobilière, IFI)
6. Transfer Tax
7. VAT (TVA) on New Builds
8. Income Tax on Rental Income
9. Capital Gains Tax (Plus-Value)
Tips for Tax Optimization
By being well-informed about these taxes and levies, you can be better prepared for the purchase of a property in France.
Our comprehensive guide is the perfect companion if you are considering moving to France or are already living there. Learn all about buying a house, mastering the French language, finding a job, experiencing the culture and discovering tourist attractions. With this guide, you'll have all the information you need to live successfully in France. Read on now to discover it all!
When buying a property in France, you will encounter various taxes and levies. Here is an overview of the main taxes you need to consider:
1. Notary Fees (Frais de Notaire)
- Costs: Notary fees vary between 7% and 8% of the purchase price for existing properties and approximately 2% to 3% for new builds.
- Included: These costs include registration tax, notary fees, and various administrative costs.
2. Registration Tax (Droits de Mutation)
- Costs: For existing properties, this tax is usually between 5% and 5.8% of the purchase price. For new builds, it can be lower.
- Varies by Region: The exact percentages can vary by region.
3. Property Tax (Taxe Foncière)
- Annual Tax: This annual tax is paid by the property owner on January 1st of the respective year.
- Depends on: The amount of the taxe foncière depends on the size, location, and type of property.
4. Residence Tax (Taxe d'Habitation)
- Annual Tax: This tax is owed by the person who occupies the property on January 1st of the year, whether the owner or a tenant.
- Reduction: This tax is gradually being phased out and will eventually be abolished for most households.
5. Wealth Tax (Impôt sur la Fortune Immobilière, IFI)
- Threshold: This tax applies to individuals with real estate worth more than €1.3 million.
- Rate: The rates vary from 0.5% to 1.5%, depending on the value of the real estate.
6. Transfer Tax
- Costs: When transferring property ownership, you pay a transfer tax, which is usually included in the notary fees.
7. VAT (TVA) on New Builds
- Rate: For new builds, you pay 20% VAT. However, reduced rates may apply under certain conditions, such as social housing.
8. Income Tax on Rental Income
- Tax Liability: If you plan to rent out the property, the rental income is subject to French income tax.
- Rate: The rate varies depending on the total income and can go up to 45%.
9. Capital Gains Tax (Plus-Value)
- Capital Gains: When selling a second home, the profit is taxed.
- Exemptions: There are exemptions and deductions available, for example, after a certain holding period.
Tips for Tax Optimization
- Professional Advice: Hire a French tax advisor for specific and detailed advice.
- Deductions: Take advantage of possible deductions and exemptions.
- Double Taxation Treaties: The Netherlands and France have a treaty to avoid double taxation. Find out how to make optimal use of it.
By being well-informed about these taxes and levies, you can be better prepared for the purchase of a property in France.
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Our comprehensive guide is the perfect companion if you are considering moving to France or are already living there. Learn all about buying a house, mastering the French language, finding a job, experiencing the culture and discovering tourist attractions. With this guide, you'll have all the information you need to live successfully in France. Read on now to discover it all!
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