Property Tax - Being Owner in France

Being owner of a priority in France

France is one of the most popular tourist destinations. It is also very attractive to non-resident real estate investors. Nevertheless, the administrative, legal and fiscal aspects represent concerns to foreign investors.

Our goal is to advise you and accompany you throughout your project on these points.

When you purchase a property, there are several steps:

Offer to purchase / bid
Signature of the sales agreement (payment of 5% to 10% of the purchase price)
Cancellation period of 10 days (the purchaser has the right to cancel the purchase without paying any compensation)
Possibly obtaining a loan, if required
About 2 months for signature of the authentic deed in the presence of the notary (payment of the selling price and handing over of keys)

Concerning the notary fees, only the purchaser is liable. The total cost represents approximately 7 % of the purchase price

Property and Residence Tax

In France, the housing tax and property tax are the two main taxes for which you will be liable.

You receive your tax assessment directly by mail or you have the option to pay and receive your tax notification online.

The property tax: It is due every year by the owners of a built or non-built property. It is defined by the tax service and the center of public finances. It takes into account the rental value of the cadastral delimitation and the rate determined by the local authorities. The payment deadline is usually around October 15th.

Residence tax: This tax applies to all housing, principal or secondary residences, and all occupants (owners or tenants).

This tax is directly calculated by the tax authorities, it is due if the tenant occupies the dwelling on 1st January of the tax year. The rental value of the property is multiplied by the tax rate defined by the local authorities. The payment deadline is usually around November 15th.

Taxation of rental income

When you rent a good during the season, two plans are applicable: the flat-rate plan and the actual plan. The profits are taxed:

According to the prevailing rate for French residents + social security contributions up to 17.2%

According to a minimum rate of 20% for non-residents + social security contributions up to 17.2%

Real Estate Wealth Tax

Who must pay this tax?

You are liable for this tax if your property assets are greater than 1.3 million euros.

Taxable asset: properties built or not (building or agricultural land ...), real estate assets, shares of a real estate company. The principal residences: if the tax residence is in France, you will benefit from a reduction of 30%.

Deductible liabilities: Since the last Finance Law, only certain debts are deductible.

General rule: are deductible, debts existing on January 1st of the taxable year and which are related to the acquisition of a property, costs of renovation, maintenance, construction, reconstruction, improvement or expansion.
Tax debts: only those related to taxable assets.
Loans and bank debts: The in-fine loans (single amortization at the end of the loan) become partly deductible. The debt is reduced by a pro-rated amount taking into account the number of years spent on the number of years of the credit (thus creating a depreciation and consequently a reduction of the deductible debt)

Concerning non-residents:

Nonresidents are taxable only on the real estate they own in France.
In addition, foreign citizens settling in France benefit from a tax exemption on their property abroad, until the end of the 5th year following their move to France.

Capital gains on the property

The taxation of the real estate capital gain is determined as follows:

Selling price - acquisition price = gross capital gain
The net capital gain is determined after the deduction of the allowances for the period of possession of the property, according to the table below.

The tax rates are as follows:

19% of income tax + additional taxes of 2% to 6% + social security contributions of 17.2%

The following charges may increase the purchase price:

Purchase fees (actual amount or flat-rate of 7.5% of the purchase price)
Actual amount invested in construction, reconstruction or expansion, or if the property has been owned for more than 5 years, there is a possible option for a flat-rate of 15% of the purchase price.

Inheritance in France

Transferring your assets

Are you subject to French civil law? (inheritance law)

The law that applies is the law of the last place of residence of the deceased

Unless the deceased has stipulated in a will, that the applicable law must be that of the country of which he/she holds the nationality. French law states that it is not possible to disinherit your children (principle of "hereditary reserve")

The inheritance tax:

The transmission of your goods is subject to French tax if:
- Your last place of residence was in France
- You own one or several properties in France
- Your heirs / beneficiaries have resided for at least 6 years in France during the 10 years preceding the inheritance, if there is no tax treaty.