Ask Miranda: How long must I be a resident of France to escape capital gains on the sale of my home?

Question:  I own an apartment in Paris.  I am a US citizen.  I want to become a permanent resident in France.  Once I achieve residency, if I sell my apartment to purchase another apartment (bigger), do I pay capital gains tax? Is there a minimum time for the residency requirement?

There is no capital gains tax on the sale of a primary residence in France. Technically, there is no minimum period of residency: once a property is the owner’s primary residence for fiscal purposes, the property can be sold without paying any capital gains tax, and the earnings on the sale can be used in their entirety to purchase a new home. We work closely with Sam Okoshken, an American attorney with a Paris practice who advises international clients living or investing in France. He recently told us that the fisc (shorthand for the French fiscal authorities) have been paying closer attention than before to sales of properties where the claim of primary residence is recent. Depending on the circumstances, he might advise that you are able to show two years of residence tax returns to back up a claim of primary residence for purposes of avoiding capital gains tax on the property sale. One thing to note: primary residence is a fiscal status, not an immigration status. It may be possible to file income taxes in France indicating that address as your primary residence even before (or without) emigrating to France. Establishing residency for immigration purposes has its own benefits and drawbacks which should be carefully explored before making this important decision. For more questions regarding Paris real estate check out our FAQ.