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Summary of Changes

  •  “Plus-values immobilière” or French capital gains tax has been reduced from 30 years to 22 years, as of the 1st September 2013. (Social charges are still payable up to 30 years)
  • An additional 25% reduction in the net capital gains tax applies to any sales that complete between the 1st September 2013 and 31st August 2014.

What is “Plus-values immobilière” or French capital gains tax?

Capital gains tax is a tax paid on the sale of land or buildings, your capital gain is the difference the price you paid for your property when you bought it and the price you are selling it for.

How do I calculate my Capital Gain?

Subtract your purchase price from your selling price, but the following can also be deducted to give you a net capital gains figure, providing you have documentation to prove your expenditure.

  • Notaire’s fees
  • Agent’s fees
  • Construction or reconstruction works
  • Cost of diagnostics

If you do not have this documentation it may be possible to apply the following allowances:

  • 7.5% of the purchase price for notaire and agent fees
  • 15% of the purchase price for construction, providing you have owned the property for at least 5 years.

It is important that any figures produced are fully checked and confirmed by your notaire and/or French accountant.

How much is it?

The base Capital Gains tax for gains of €50,000 and below is 34.5% this is broken down into 2 parts:

1. Income tax – 19%

    • After 5 years of ownership this tax is reduced by 6% for each year of ownership until the 21st year
    • In the 22nd year of ownership there is a reduction of 4%
    • After 22 years of ownership the income tax part is no longer payable

2. Social Charges – 15.5%

    • After 5 years of ownership this tax is reduced by 1.65% for every year of ownership until the 21st year
    • In the 22nd year it is reduced by 1.6%
    • From the 23rd year onwards there is a reduction of 9% per year
    • After 30 years it is no longer payable

If your capital gain is over €50,000 there is an additional increasing percentage capital gains tax, starting at €50,000 where you pay 34.5% increasing to a maximum of 40.5% for any capital gains over €260,000.

If you really want to confuse yourself, please see the table below for all rates, but we really recommend you talk to your notaire or tax adviser!

Taxable Capital Gain (TCG) Tax Amount %
50.001 – 60.000€ 2% of TCG – (60.000 -TCG) x 1/20
60.001 – 100.00€ 2% % of TCG
100.001 – 110.000€ 3% % of TCG – (110.000 – TCG) x 1/10
110.001 – 150.000€ 3% % of TCG
150.001 – 160.000€ 4% % of TCG – (160.000 – TCG° x 15/100
160.001 – 200.000€ 4% % of TCG
200.001 – 210.000€ 5% % of TCG – (210.000 – TCG) x 20/100
200.001 – 250.000€ 5% % of TCG
250.001 – 260.000€ 6% – (260.000 – TCG) x 25/100 (25%)
Above 260.000€ 6% TCG

Does it apply to everyone?

No, you are exempt if…

  • You are selling your main residence in France.
  • You are a French resident and you are selling your second home but you do not own your main residence.
  • You are a French resident you are selling a property which is not your main residence but intend to use the proceeds to buy a main residence, providing the money is used within 2 years to buy your main residence.
  • There are a few other exceptions including building land, selling to spouses, children or PACS/civil partners, amongst others, so it is always best to check all information with your notaire when preparing to market your property.

So what’s changed?

Up until February 1st 2012 if you’d owned your property for 15 years or more you were exempt from Capital Gains Tax. However, in 2012 the period was doubled, so you had to have owned your property for 30 years or more to be exempt.

Since August 2012 non-residents have also been subject to the French social charges (15.5%), which were previously only applicable to French residents.

The new changes have now been made official and will apply to any acte signed after September 1st 2013. These new changes mean after 22 years you will be exempt from Capital Gains tax, however you still have to pay the social charges (15.5%) up until 30 years. As explained above however, the amount you have to pay decreases the longer you have owned your property.

There is also a one off reduction of 25% which is calculated on the net base taxable for capital gains tax. This therefore takes into account the deduction for the period of ownership.

This 25% reduction applies to any sales which take place between the 1st September 2013 and 31st August 2014. However sales between associated parties (e.g. family members, spouses, partners) are not eligible for this reduction.