When investing in a new property in France it is important to understand the current tax requirements. This is especially true for properties that are deemed to be your second home, as you are unlikely to have access to many of the standard tax reliefs available to residents.
Here are the main property-related taxes you need to be aware of when buying a property in France.
Capital Gains Tax
In France, capital gains tax is payable on the sale of all buildings, land and shares. Since 2018, savings, investment income and gains are subject to a single flat rate tax of 30%. This is comprised of social charges of 17.2% and income tax at 12.8%.
When it comes to the sale of a property the current rate stands at 36.2%.
Gains under £50,000 are not subject to any surtaxes, but beyond that amount the rates rise for gains over €260,000, ranging anywhere from 2% to 6%.
The longer you have owned the property, the less capital gains you have to pay, which starts six years after the purchase, and after 22 years you become fully exempt.
Any social security tax charges are also reduced after 5 years, with full exemption possible after 30 years.
EU residents (which could change for the UK after Brexit) can also seek exemption from gains made on a property as long as it was sold within 5 years of leaving France and you were a fiscally resident for a minimum of 2 years.
Tourist Tax Rates
Choosing to rent out your property in France to guests will require them to pay a daily tourist rate. This is known as a ‘taxe de sejour’ and is charged per person, per night. The amount will vary depending on the standard and quality of the accommodation they are staying in.
As of 2019, current daily rates range from €0.20 to €4, which applies to each individual. More information about this tax can be on the service-public.fr website
Guests do not have to pay for children under the ages of 18 and if the property is in Paris, there is an extra 10% increase in the amount required to pay.
Wealth tax (Impôt sur la Fortune) was repealed in 2018 and replaced with a new wealth tax (Impôt sur la Fortune Immobilière).
On the 1st January of each year the value of the worldwide real estate assets of French residents are assessed, however, wealth tax is only applicable if your total taxable property assets come to €1.3 million or higher.
Anything up to €800,000 is tax free, while values between €800,000 and €1.3 million are taxed at 0.5%. The rates steadily increase up to 1.5% for anything over €10 million.