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How much capital gains tax will I have to pay when I sell my French property?
There is no capital gains tax on the sale of a primary residence in France.
For a secondary residence owned either individually or through an SCI, the amount of capital gains owed at the time of sale is determined by (1) the fiscal residence of the seller, and (2) the number of years that the property was owned by the seller.
The base rates are as follows:
- French residents: 32.5%
- EU residents: 19%
- Non-EU residents: 33.33%
Currently, the tax owed is reduced 10% per year for ownership between 5 and 15 years, with no capital gains tax owed after a property has been held for 15 years.
Starting February 2012, the schedule will drastically change:
- Between 6 and 17 years of ownership: 2% allowance per year.
- Between 18 and 24 years of ownership: 4% allowance per year.
- Between 25 and 30 years of ownership: 8% allowance per year.
For the purpose of calculating the capital gains, fees paid to licensed real estate agents on the purchase or the sale, and notaire fees paid at the time of purchase, are included in the basis of the property for purposes of calculating the seller’s taxable gain. Other adjustments also apply, including certain renovation and improvement expenses.
After 5 years of ownership, a seller can either itemize actual renovation expenses, or add 15% of the purchase price to the basis of the property as the value of improvements (even if no improvements were made).
Any tax due is calculated and collected by the notaire at the closing of the sale. If capital gains tax is due, the law requires that a nonresident seller hire a company that guarantees that the seller paid the government the correct amount of capital gains. The fee is 1% of the selling price of the property.
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