Income tax - Real estate gain

Verified 01 January 2024 - Legal and Administrative Information Directorate (Prime Minister)

You sold a property more expensive than you bought it? In this case, you have realized a surplus value. It is taxable unless you have sold your residence main. You can benefit from an exemption or a abatement on taxes payable depending on the characteristics of the property or your personal situation.

When you sell a property you own, you have to calculate the difference between the following prices:

  • Sale price of the property
  • Purchase price of the property

If the result of this calculation is positive (you sell more than you bought), you realize a gain called capital gain.

If the result is negative, you realize a loss called loss.

Example :

You bought a house at the price of €100,000.

If you resell it at the price of €120,000, you realize a added value of €20,000 (€120,000 - €100,000).

If you resell the accommodation at the price of €90,000, you realize a loss of €10,000 (€90,000 - €100,000).

Capital gains on real estate are subject to the following taxes:

You are subject to income tax for real estate capital gains realized under the managing your private real estate assets.

You are affected in the following cases:

  • Sale of a property (apartment, house, land, forest, agricultural land)
  • Sale of rights attached to immovable property (easements , usufruct, bare-ownership for example)
  • Sale of property or rights through a civil real estate business (not subject to business tax) or a real estate investment fund (REIT)
  • Exchange of goods, division or business

You are concerned by the taxation of the capital gain that your tax residence located in France or abroad.

Please note

Special rules apply for non-residents.

You are totally exempt if you realize a profit on the sale of your principal residence and its outbuildings (cellar, garage, parking space, courtyard, etc.).

This is your usual and effective home, which is the one you occupy most of the year.

The unit must be your principal residence at the time of sale.

In the event of separation or divorce, it is sufficient that one of the former spouses (married, past or cohabiting) has occupied the dwelling until it is offered for sale.

The main exemptions from capital gains tax are linked to the following:

  • Characteristics of the property transferred
  • Seller's situation
  • Situation of the purchaser

Most exemptions are conditional.

Exemptions relating to the property transferred

You are also exempt if you sell a unit other than the principal residence if you meet the 2 conditions following:

  • You use the sale price to buy or build your main home within 2 years
  • You did not own your principal residence in the 4 years prior to the sale.

In all cases, you are exempt from tax on real estate capital gain for everything property held for more than 22 years.

Please note

the gain realized on the sale of property held for more than 30 years is also exempt from social security taxes.

You are also exempt in the following cases:

  • Property whose sale price does not exceed €15,000
  • Sale of a right of elevation until 31 december 2024
  • Property exchanged in the context of certain reparceling

Vendor Exemptions

You can be exempt if you are in one of the following situations:

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You are receiving an old age pension

You are affected if you or your spouse receives a retirement or retirement pension reversion.

You are exempt if your income does not exceed €12,456 for 1re share of family quotient (+ €3,327 per additional half share) in 2022 for a sale in 2024.

Please note

Amounts are different in the Dom: titleContent.

You must not be subject to theIFI: titleContent (for the penultimate year before the sale).

You have a Mobility Inclusion Card (MIC)

You are concerned if you or your spouse have a disability inclusion mobility card.

You are exempt if your income does not exceed €12,456 for 1re share of family quotient (+ €3,327 per additional half share) in 2022 for a sale in 2024.

Please note

Amounts are different in the Dom: titleContent.

You must not be subject to theIFI: titleContent (for the penultimate year before the sale).

You live in an elder care facility

You are affected if you live in a care facility for the elderly (Ehpad: titleContent for example).

You are exempt, subject to conditions, in case of sale of your former principal residence.

Your income must not exceed €29,230 for 1re share of family quotient (+ €6,829 for 1re additional half-part and €5,376 for subsequent half shares) in 2022 for a sale in 2024.

Your former principal residence must be sold within 2 years of your entry into the establishment. It must not have been occupied (rented or loaned), except by your spouse.

Please note

Amounts are different in the Dom: titleContent.

You must not be subject to theIFI: titleContent (for the penultimate year before the sale).

You live in a facility for adults with disabilities

You are concerned if you live in a host institution for disabled people (e.g. a living center or a specialized host house).

You are exempt, subject to conditions, in case of transfer of your former principal residence.

Your income must not exceed €29,230 for 1re share of family quotient (+ €6,829 for 1re additional half-part and €5,376 for subsequent half shares) in 2022 for a sale in 2024.

Your former principal residence must be sold within 2 years of your entry into the establishment. It must not have been occupied (rented or loaned), except by your spouse.

You must not be subject to theIFI: titleContent (for the penultimate year before the sale).

You are a non-resident of France

The capital gain you realize is taxable under the same conditions as for a French resident.

If you are not a national of a Member State of theEU: titleContent or theEEE, special provisions may be provided for by international convention.

However, you are exempt if the capital gain is realized on the sale of your principal residence.

You must meet the following 2 conditions:

  • The sale was made at the latest on December 31 of the year following that of the transfer of your tax domicile outside France
  • The accommodation was not made available to a third party between the transfer of residence and the sale

You are also exempt in case of sale of another residence and within the limit of a capital gain of €150,000, if you meet the following conditions:

  • You are a national of an EU countryEuropean Union or theEuropean Economic Area having concluded an agreement with France
  • You have been permanently resident in France for at least 2 years

The sale must take place no later than 31 December of the 10e the year following the year of the transfer of your tax domicile outside France.

However, no time limit is imposed if you have free disposition of the accommodation at least since the 1er January of the year preceding the year of sale.

This benefit is granted up to one residence per taxpayer.

Buyer Exemptions

You are exempt in the following cases:

  • Property sold directly or indirectly to a social housing agency (until December 31, 2025)
  • Property sold to a private operator who commits to realize or complete social housing (until 31 December 2025)
  • Expropriated property on condition that the entire compensation is used for the acquisition, construction, reconstruction or expansion of one or more buildings within 12 months
  • Property disposed of by an individual who has exercised his right of abandonment under certain conditions, if it uses the full transfer price for the acquisition, construction, reconstruction or expansion of one or more buildings within 12 months

Please note

In stretched areas (AA, A and B1), the exemption is also granted, subject to conditions, if the property is sold for use in the intermediate dwelling. To know the area of the property concerned:

Know the area of his commune: A, Abis, B1, B2 or C

You must calculate the difference between:

  • Sale price of the property
  • Purchase price of the property

You get the (gross) capital gain if you make a gain.

If you realize a loss, i.e. a loss, you can deduct it from a gain realized when selling another property only exceptionally.

For example: block sale of a building acquired in successive fractions.

Sales price

The selling price is the price indicated in the bill of sale.

You can deduct from the price, on receipts, the expenses paid during the sale (for example, expenses related to mandatory diagnostics).

The sale price must be increased by the amounts paid to you (for example, an eviction allowance paid by the buyer to the incumbent tenant).

Acquisition price

Rules differ depending on whether the property was purchased or received free of charge:

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Property purchased

If you purchased the property, the purchase price is indicated in the bill of sale.

This price may be increased by the following fees, on production of evidence:

  • Expenses and allowances paid to the seller at the purchase (for their actual amount)
  • Acquisition costs (registration fees, notarial fees) for the actual amount justified or for a lump sum of 7.5% of the purchase price
  • Expenditure on works (construction, reconstruction, extension, improvement) subject to conditions as to the actual amount justified or for a lump sum of 15% the purchase price, if the property has been held for more than 5 years
  • Road costs, networks and distributions (e.g. development costs for subdivisions)

Property received free of charge

If you received the property by gift or succession, the purchase price shall be the value used for the calculation of the gift or inheritance tax.

Deduction for holding period

The capital gain shall be reduced by one abatement which depends on how long you have owned the property.

The plate is different in the calculation of income tax and social security contributions.

Tableau - Deduction rate for the sale of real estate

Retention period

Rate of abatement per year of detention

Income tax base

Tax base

Up to 5 years

0%

0%

From 6e at 21e year

6%

1.65%

22e past year

4%

1.6%

Beyond 22e year

Exemption

9%

Beyond 30e year

Exemption

Exemption

Example :

You have resold a property that you have since owned 10 years. With this sale, you realized a capital gain of €10,000.

  • You benefit from a tax allowance of 6% per year of the 6e at 10e year, or 30% (6% x 5).
    You have a reduction of €10,000 x 30%, or €3,000. You will therefore declare an income of €7,000 (€10,000 - €3,000).
  • You benefit from a deduction from social security contributions of 1.65% per year of the 6e at 10e year, or 8.25% (1.65% x 5).
    You have a reduction of €10,000 x 8.25%, or €825. You will have to pay social security contributions on the basis of €9,175 (€10,000 - €825).

Example :

You have resold a property that you have since owned 25 years. You have realized an added value of €10,000.

Your surplus value is exempt from income tax.

You benefit from a deduction from social security contributions from:

  • 1.65% per year of the 6e at 21e year, or 26.4% (1.65% x 16)
  • 1.6% for the 22e year
  • 9% of the 23e at the 25the year, or 27% (9% x 3)

Or a total reduction of 55%(26.4% + 1.6% + 27%).

You have a reduction of €10,000 x 55%, or €5,500.

You will have to pay social security contributions on the basis of €4,500 (€10,000 - €5,500).

Example :

You have resold a property that you have since owned 30 years. With this sale, you realized a capital gain of €10,000.

Your surplus value is exempt from income tax.

She's also exempt from social security contributions.

Exceptional reductions

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Deduction linked to operations of city planning or revitalization of the territory or of national interest

An exceptional reduction of 60% (or 75% for certain transfers) shall apply, subject to conditions, in areas covered by a large-scale city planning operation, or by a land revitalization operation, or an operation in the national interest.

The purchaser undertakes to demolish existing buildings in order to reconstruct one or more collective housing buildings, under certain conditions.

Promise of sale must be signed between 1er january 2024 and december 31, 2025.

The allowance is applicable to determine the basis of assessment for income tax and social security contributions.

This allowance applies to the capital gain depending on the length of time the property is held.

It may be increased to 85% whether social housing (or intermediate housing) represents at least 50% the total area of the buildings.

The abatement does not apply if you sell the property to:

  • Spouse
  • Past Partner
  • Cohabiting Partner
  • Ascending (or your spouse's)
  • Descendant (or your spouse's)

The rebate also does not apply if you sell the property to a corporation of which you or your spouse (or an ascendant or descendant) is a partner or becomes a partner in connection with the sale.

FYI  

the construction work must be completed in a four-year period from the date of acquisition.

Exceptional abatement in tense areas

An exceptional reduction of 60% applies in zones A, A bis or B1.

The purchaser must commit to demolishing existing buildings in order to rebuild one or more collective housing buildings, under certain conditions.

Promise of sale must be signed between 1er january 2024 and december 31, 2025.

To find out if the dwelling is located in zone A, AA or B, you can use the following online service:

Know the area of his commune: A, Abis, B1, B2 or C

The allowance is applicable to determine the basis of assessment for income tax and social security contributions.

This allowance applies to the capital gain depending on the length of time the property is held.

It may be increased to 85% if social housing is at least 50% the total area of the buildings.

The abatement does not apply if you sell the property to:

  • Spouse
  • Past Partner
  • Cohabiting Partner
  • Ascendant (or your spouse's)
  • Descendant (or that of your spouse)

The rebate also does not apply if you sell the property to a corporation of which you or your spouse (or an ascendant or descendant) is a partner or becomes a partner on the sale.

FYI  

the construction works must be completed within 4 years from the date of acquisition.

On your capital gain, you have to pay a flat-rate tax and social security contributions.

You can estimate the amount payable with the simulator next:

Estimate the amount of taxes payable on a property gain

Income tax

The capital gain, after deduction of the rebate or rebates, is taxed at the rate of 19%.

Example :

For a taxable capital gain of €20,000, income tax is €3,800 (€20,000 x 19%).

An additional tax applies in case of taxable capital gain greater than €50,000.

The rate varies from 2% to 6% depending on the amount of the realized gain.

Form n°2048-IMM-SD contains a table to establish the amount (in practice, it is calculated by the notary).

The tax does not apply to exempt sales or sales of building land.

FYI  

you can see examples of calculation of real estate capital gains on the tax administration information leaflet and on the impots.gouv.fr website.

Social security contributions

You must pay social security contributions at the rate of 17.20%.

Example :

For a taxable capital gain of €20,000, social security contributions are €3,400 (€20,000 x 17.20%).

With income tax, the total levy will therefore be €7,200 (€3,800 + €3,400).

Please note

If you are a non-resident, a international tax convention may lay down different rules.

Formalities carried out by the notary

The notary in charge of the sale carries out the following operations:

  • Approaches to the tax authorities
  • Calculation of taxable capital gain and amount of tax payable
  • Drawing up of the declaration
  • Payment of real estate capital gains tax to the property advertising services of the location of the property

Indicate the capital gain on your tax return

You must include the following information on your tax return:

  • Amount of the capital gain declared by the notary
  • If necessary, exempt capital gain in the case of 1re assignment of housing other than your principal residence

Tax returns via Internet is required if your principal residence is equipped with internet access and you are able to file your return online.

For 2023, the tax return is complete.

The 2024 income tax return for 2023 will begin in April 2024.

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