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How Does It Work Buying Process Financial Projection Taxes FAQ
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French Real Estate Taxes |
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This is for information only, as for a French property owner you might be entitled to only some of these taxes. Also to know exactly what will be the taxes on the property you plan to own please contact us or a professional in this matter.
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Land Tax or Property Tax ("impôt foncier")
This is an annual charge payable to the city. The "taxe foncière" is due and payable on 1st January of every year by the owner as registered at the "Mairie" (town hall) of the city ("commune"). There is a two year exemption for newly built properties
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Dwelling tax ("Taxe d'habitation")
This is another tax payable to the "commune" by the person actually in occupation of the property (so, if a house is let, the tenant would be liable to pay, not the landlord; if the house is occupied rent free, the occupant is liable). The "taxe d'habitation" is due and payable on 1st January of each year.
In case of a leaseback property this tax is paid by the management company.
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Income tax ("Impôt sur le revenu " )
Upon the income received from letting property in France. Any person not resident in France who receives rent from property there (even though the rent be paid in the Country where the person lives) is assessable to French income tax upon it.
You will be taxable in function of your total income in France, after all deduction. Tax bracket range from 0% to 55%.
In case of leaseback this tax will be reduced and in most cases not apply.
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Wealth tax
You must have a net worth in France over €720,000 to be affected by this tax.
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Capital gains tax ( “impôt sur les plus values“ )
There is a general exemption from this type of tax in France for the main residence, which may be extended to any foreign tax payer who has become permanently resident in France and lives in the French property as his main residence. If the latter owns more than one property in France, he will have to indicate to the French tax authorities his election for the main residence.
In all other cases, capital gain tax arise in France upon the sale of the property where the gain is above an annually fixed figure.
As a non-resident tax payers, capital gain tax is calculated on the basis of the difference between the sale price and the purchase price, after the following deductions:
• All closing cost
• The initial purchase price will be indexed to the inflation rate over the period of ownership.
• All repairs and improvements made on the property.
• The capital gains tax will be reduced by 5 % for each year of ownership starting the end of the second year (so the gain is no longer taxable when selling the property after more than 22 years).
• There are also the standard tax allowances that add up to €1.000 for each vendor, €3.000 for each spouse and €1.800 per child (only on the sale of the first second home).
• The basis rate of the capital gain tax is 33.33%. This tax has to be paid at the time of the sale
• Selling price – (buying price + deduction) = taxable capital gain.
In case of leaseback if you own a package of properties that brings you over 23,000 gross income per year and you are registered as “LMP” with the tax authority, you will be tax free on capital gain if you keep your property a minimum of 5 years.
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Inheritance Tax
The rate of the inheritance tax depends on the link between the beneficiary and the deceased and the value received. We can help you find the adequate professional advice to get the optimal information according to your overall family status.
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