Property Taxes in France for Non-Residents in 2024
Owning property in France and getting a profit from it by renting is related to a number of rules and obligations to the administrative tax system of the state. Private property in France is reliably protected by law. If you are a non-resident, but have property in France, you need to pay property taxes, as well as income tax on profits from your property.
How much is property tax in France?
In France, there are a number of taxes related to the ownership of property. Almost every housing transaction, such as the purchase, sale or transfer of property, will involve the payment of tax in favour of the state.
Registration fees
If you decide to purchase property in France, then a notary will handle all documentation, registration in state registers, communication with the city administration and banks. The entire amount is transferred to him at the time of registration and conclusion of contracts, and later he transfers it to the seller after the transaction is completed.
Registration fees are a mandatory expense item for the purchase and sale of property in France. They consist of:
- notary expenses (from 2.5% for primary and up to 7.5% for secondary housing);
- request to the cadastre;
- request for urban planning documents;
- clearing property from encumbrances;
- registration of rights to property (0.1%);
- directly «registration fees» (0.715% for primary and 5.09% for secondary property);
- other administrative expenses.
By law, this event is equated to an increase in fixed capital and is taken into account when selling property.
Property ownership tax in France
After purchasing a property, you must pay property tax (taxe foncière) annually, regardless of whether you live in France or not.
The rate of this tax is dynamic and determined by local authorities. The basis of taxation is the cadastral value of rental housing: 50% of the cadastral rental value for built-up areas and 80% for undeveloped ones.
The factors on which the rate depends are the area of housing and the region where it is located. In general, the more developed an urban district is, and the more businesses there are in it, the lower the real estate tax rate.
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Land property tax-exempt:
- owned by the state;
- with religious institutions;
- with buildings used in agricultural activities;
- with truffle and walnut plantations;
- with social housing;
- with new buildings for a limited period of time.
Persons over the age of 75 with low income or receiving benefits may also be exempt from paying tax.
An example of calculating a property tax:
The apartment has an area of 80 square metres in Antibes, 100 metres from the coast with a cadastral rental value of 10.42 euros per square metre, it can be rented for 833.6 euros per month.
The annual rental revenue will be 10,003.2 euros. The tax base will amount to 50% of the annual revenue, that is, from 5,001.6 euros.
Administrative payments will be: municipal tax — 12.53%, departmental tax — 12.42%, special tax — 0.205%, garbage collection tax — 9.5%, administrative expenses — 60 euros. You will need to pay 1,792.75 euros in total.
Accommodation tax in France
The residence tax (taxe d’habitation) is paid by the person who lives in the purchased property. If the property is bought for rent, then the tenant pays for it. The rate is also determined by the local authorities and depends on the well-being of a particular city.
In 2023, the tax was abolished for all households whose property is considered the main place of residence.
However, the tax is kept for all secondary properties. If the owner of the property does not live in it permanently and does not rent it out for a long time, then he pays the tax, which is calculated at the tax rate on the second home.
Residential tax on second homes in France
Residential tax on second homes is another name for the accommodation tax, which is currently required to be paid only to those for whom the property is not the main place of residence:
- in the case of long-term rental of your property, you do not need to pay tax;
- in the case of short-term rental, the tax is included in the cost of the tenant’s stay (paid by the tenant);
- in the case of using your second property as a holiday residence, the tax is paid in full annually.
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The residential tax on second homes is calculated on the basis of the cadastral value of the lease. The price is updated every year. To calculate the amount, it is necessary to multiply the rental price by the tax rate, which varies between municipalities.
Exemption from residential tax on second homes is provided in the following cases:
- the professional activity is located near the «second home» and requires the investor to live there, not in the main house;
- the main place of residence is a nursing home;
- the main residence is uninhabitable.
Luxury tax in France
If the value of the purchased property exceeds the established limit of 1.3 million euros, French law provides the luxury tax IFI (impôt de solidarité sur la fortune), at a progressive rate of up to 1.5% of the cost of housing. Apartments, private houses, garage and utility blocks, as well as land plots without buildings are considered property for this tax.
When calculating the luxury tax, it matters whether you have French residency and when it was obtained.
- Individuals whose centre of economic activity is located outside France, and who are tax residents of another country, must pay luxury tax only for their property located in France, the amount of which exceeds the specified limit.
- If you have just obtained French residency and were a resident of another country in the previous 5 years, then you will have to pay tax only for property in France (before the expiration of the five-year period).
- After the end of five years of residence in France, you will need to pay luxury tax in the same way as citizens of this country: all property around the world is subject for taxation.
There is a legal way to avoid paying luxury tax in France by having a residence in the country. It is necessary to register your property with a legal entity, a family company SCI, where family members will have shares not exceeding the limit of 1.3 million euros.
Property rental income tax in France
When planning to make a profit from property in France, it is worth considering the different categories of premises intended for rent from the point of view of taxation (Impôt sur le revenu).
The main condition is the presence or absence of furniture from a special list in the property for rent. Among the main items on this list are bed linen, kitchen utensils and cutlery, a lighting system — what makes the room comfortable for a long stay.
Under conditions of complete or partial absence of items from the list, housing comes into the category of «unfurnished», and income from renting it out will be subject to simple income tax at a progressive rate. At the same time, there is a difference in the declaration process and the right to tax deductions, depending on whether the annual rental income exceeds the amount of 15 thousand euros.
If the apartment contains the entire list of items that characterise it as «furnished», then the income from such a lease is subject to industrial and commercial profit tax (BIC). Renting an apartment can be classified as professional and unprofessional. Two main differences between the categories: it is considered that you rent an apartment for non-professional (micro-mode) rent if:
- the annual income from this activity of all members of your household is less than 23 thousand euros;
- the income from renting a furnished apartment is less than the total amount of other income of your household.
In all other cases, the lease will be considered professional, and the «real tax» regime will be used. The amount of tax is considered a coefficient at a progressive rate depending on the amount of total income.
Vacant home tax in France
In some regions of France, the government is stimulating economic development by introducing a tax on empty homes (la taxe sur les logements vacants) for unfurnished premises that have been empty for more than a year. In such cases, the owner will have to pay a tax of 12.5% of the cadastral value of the lease after one year of downtime of the property and 25% each subsequent year.
Tax in the amount of 3%
France provides for a tax of 3% of the market value of a building owned by French or foreign legal entities.
Capital gains tax in France on property
The difference between the purchase and sale value of real estate is considered an increase in capital and is taxable under French law (Plus-value immobilière).
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The capital gains tax consists of two parts:
- income tax on the amount of profit;
- social charges.
The amount of the rate depends on whether you are a resident of France at the time of the sale. If your place of residence is France, the rate will be 19% of the profit for income tax and 17.2% for social charges.
For non-residents, the income tax rate in France is 30%, and the percentage of social charges is determined by an international tax treaty.
There are many tax benefits and exceptions to reduce income tax:
- Thus, for residents of France, capital gains tax is not required to be paid if the property was the main place of residence (the amount of days spent in the country per year exceeded the number of days spent in other places).
- In the absence of residency, housing is considered a secondary place of residence and tax must be paid.
After 5 years of property ownership, income tax rates and social charges will gradually decrease.
So, after 22 years of ownership, profits will no longer be subject to income tax, and after 30 years of ownership, you will not need to pay a social fee.
Inheritance tax in France
When transferring rights of property to heirs, it is necessary to take into account the rules of inheritance taxation in France.
The tax (l’impôt sur les successions) is required to be paid by resident heirs who have lived in the country for more than 6 years. It must be paid even if the inherited property is located outside France.
The difference in taxation for resident and non-resident heirs:
- if the inheritance is received by a non-resident, then only objects within the country are taxed;
- if the heir is a resident of France, real estate outside the country is also taxed.
The tax rate is progressive and depends on family ties. The primary right of inheritance belongs to the spouse, who is exempt from paying tax. Next, the priority of inheritance goes to children, for whom the tax rate varies from 5% to 45% of the cost of housing. If the person is not a relative, the rate is increased to 60% of the cost.
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How to pay property tax in France
In the first few months after obtaining French residency or buying property, you need to contact the local tax authorities yourself and take a form for registration. When filling out, it must be indicated that the tax return is being submitted for the first time.
It should be considered that in France it is needed to file one declaration for all the household, including all the incomes of all family members.
Then, you must personally transfer it to the tax service. For the first time, the payment must be made in full, and further funds can be deposited in three stages. Next year, personal presence is not required, you can make declarations online in your personal account.
When declaring income, it is important to enter information on all sources of profit in and outside France, including salary, rental income, and interest on securities. The declaration should be submitted even if you did not have any profit for this year — in this case, it is filled out taking into account these data.
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