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Income tax - Real estate capital gains
Verified 08 avril 2021 - Legal and Administrative Information Directorate (Prime Minister)
The capital gain you realise by selling real estate is taxable on income, except for your principal residence. You can benefit from exemptions depending on the nature of the property or your personal situation.
Taxable capital gains
You are subject to income tax for capital gains realised in the course of the management of your private property in the following cases:
- Sale of real estate (flat, house, land)
- Sale of rights attaching to real property (easements for example)
- Sale through a civil real estate business (not subject to business tax) or a real estate investment fund (FPI)
- Exchange of goods, sharing or business.
Please note : real estate surplus value is subject to social.
Exempt capital gains
The main exemptions from capital gains tax on real estate are related to the nature of the property sold, the quality of the seller and the purchaser.
Most exemptions are conditional.
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Exemptions from the transferred property
You are exempt in the following cases:
- Sale of main residence and outbuildings (garages, parking areas, courses, etc.)
- Sale of a home other than the principal residence, if you use the sale price to buy or build your principal home within 2 years.
In addition, you must not have owned your principal residence in the 4 years preceding the sale - Sale of an elevation right until 31 December 2022
- Exchanged under certain consolidation operations
- Property with a selling price not exceeding €15 000
- Well held for more than 22 years
Please note : property that has been held for more than 30 years is also exempt from social security contributions.
Buyer Exemptions
You are exempt in the following cases:
- Property sold directly or indirectly to a social housing agency (until December 31, 2022)
- Sold to a private operator who undertakes to realise or complete social housing (until 31 December 2022)
- Property expropriated on condition that all compensation is repaid by the acquisition, construction, reconstruction or extension of one or more buildings within 12 months
- Property transferred by an individual who has exercised his or her right of abandonment under certain conditions, subject to the full cost of the transfer being repaid by the acquisition, construction, reconstruction or extension of one or more buildings within 12 months
Seller Exemptions
You are exempt if you are in one of the following situations:
- You receive an old age pension or have a mobility inclusion card, and your tax reference income does not exceed €10,988 for the first share of the family quotient for the year 2018 for an assignment made in 2020
- You reside in a social or medical-social institution for the elderly or disabled adults, and your tax reference income does not exceed €25,839 for the first share of the family quotient for the year 2018 for an assignment made in 2020
- You are a non-resident of France
- You did not own your principal residence in the previous 4 years. The sale of a dwelling other than the principal residence is exempt. But you must use the sale price to buy or build your main home within 2 years.
The real estate gain is equal to the difference between the sale price of the property and its acquisition price.
If you realise a capital loss, that is, a loss, you cannot deduct it from a capital gain on the sale of another property (with exceptions).
Sales price
The selling price is the price indicated in the deed.
You can deduct from the price, on supporting documents, the costs incurred during the sale (for example, the costs related to the required diagnostics).
The selling price must be increased by the amounts paid to your profit (for example, a predatory payment made by the buyer to the current tenant).
Acquisition price
Good
If you bought the property, the purchase price is indicated in the bill of sale.
The following fees may be increased, upon proof:
- Expenses and allowances paid to the seller on purchase
- Acquisition fees (registration fees, notary fees). If you cannot justify them, you can deduct a lump sum of 7.5% purchase price
- Construction expenditure (construction, reconstruction, expansion, improvement under conditions). For property held for more than 5 years, you can deduct either the actual amount justified or a lump sum payment 15% purchase price
- Road, network and distribution costs (e.g. development costs for housing development).
Received Free
If you received the property by gift or estate, the acquisition price is the value used to calculate the estate or donation rights.
Slackening
The surplus value is reduced by abasement which depends on the time you owned the property.
The plate is different for the calculation of income tax and social levies.
Detention period | Reduction rate per year of detention | |
|---|---|---|
Income Tax Base | Social tax base | |
Under 6 years | 0 | 0 |
From 6e to 21e year | 6% | 1.65% |
22e past year | 4% | 1.6% |
Beyond 22e year | Exemption | 9% |
Beyond 30e year | Exemption | Exemption |
Example :
You sold a property that you had owned for 10 years. You have realised with this sale a surplus value of €10 000.
- You receive a tax rebate on 6% per year ofe to 10e year 30% (6% x 5). This will give you a discount of: €10 000 x 30% either €3,000. You will then report income €7 000 ( €10 000 - €3,000).
- You benefit from a deduction on social contributions from 1.65% per year ofe to 10e year 8,25% (1.65% x 5). This will give you a discount of: €10 000 x 8,25% either €825. You will have to pay social levies on the basis of €9,175 (€10 000 - €825).
Exceptional drop
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Exceptional reduction in tense areas (2020 income)
An exceptional reduction of 70% applies in zones A or A bis where the purchaser undertakes to demolish existing buildings in order to reconstruct one or more collective buildings, under certain conditions.
Promise to sell must be signed between the 1to January 2018 and December 31, 2020.
Know the area of your town: A, Abis, B1, B2 or C
Directorate of Legal and Administrative Information (Dila) - Prime Minister
The allowance is applicable to determine the base of income tax and social levies.
This allowance shall apply to the capital gain depending on the duration of the holding of the property.
It may be increased to 85% if social housing at least 50% of the total surface of the buildings.
The allowance may not apply if the seller and buyer have family ties (for example, if they are couple).
FYI : the construction work must be completed within 4 years from the date of acquisition.
Slaughter linked to city planning or revitalisation operations (2021 revenues)
An exceptional reduction of 70% shall apply in areas covered by a major city planning operation or a revitalisation operation.
The purchaser undertakes to demolish the existing buildings to reconstruct one or more collective housing buildings, under certain conditions.
Promise to sell must be signed between 1to January 2021 and December 31, 2023.
The allowance is applicable to determine the base of income tax and social levies.
This allowance shall apply to the capital gain depending on the duration of the holding of the property.
It may be increased to 85% if social housing (or intermediate housing) represents at least 50% of the total surface of the buildings.
The allowance may not apply if the seller and buyer have family ties (for example, if they are couple).
FYI : the construction work must be completed within 4 years from the date of acquisition.
Tax rate
Capital gain is taxed on income tax at the rate of 19%.
An additional tax applies in the case of taxable capital gains exceeding €50 000. The rate varies from 2% to 6% depending on the amount of the capital gain realised.
Form 2048-IMM-SD contains a table to establish the amount (in practice, this is calculated by the notary).
The tax does not apply to exempt sales or sales of building land.
FYI : you can see examples of real estate capital gains calculations on the tax administration information leaflet and on site imitts.gov.fr .
Formalities by the notary
The notary responsible for the sale carries out the following operations:
- Representations to the Tax Authority
- Calculation of taxable capital gain and amount of tax payable
- Reporting
- Payment of the tax on the real estate capital gain to the services of the land advertising of the place of the property
Specifying the capital gain on your tax return
You must include the following information on your tax return:
- Amount of surplus value declared by the notary
- If necessary, exempt surplus value in case of 1re assignment of a dwelling other than your own main residence
Online Declaration
Internet reporting is mandatory if your main residence is equipped with internet access and you are able to make your declaration online.
2021 Online 2020 Income Statement
Ministry of Finance
Before validating your pre-completed return online, you must verify the information provided and, if necessary, correct and complete it. Keep supporting documents for 3 years if requested by the administration.
Paper Declaration
In 2021, you can report your income on paper if you are in one of the following situations:
- Your main residence is not equipped with internet access
- It is equipped with internet access, but you are not able to make your declaration online
You will use the pre-completed paper return received between April and June 2021. Depending on your situation, this is the return No 2042 or 2042 C. Declaration #2042 RICI groups major tax credits and reductions.
If you do not receive a print (1st declaration, change of address, change in family situation), you can report online or download the necessary declarations from early May on service-public.fr or www.impots.gouv.fr.
Certain income is to be reported on a separate return. You can also download them online. The main annexed declarations are:
- Form 2044 for the declaration of land income
- Form 2074 for the capital gains
- Form 2047 for foreigner income
Before signing your return, you must verify the information provided and, if necessary, correct and complete it.
You do not have to attach supporting documents to your paper return unless they are documents prepared by you (such as a detailed list of your actual expenses). However, keep the documents for 3 years if requested by the administration.