If you’re a non-resident owner of French real estate, selling that property can trigger a capital gains tax liability in France when the sale price exceeds what you originally paid. This applies even if you don’t live in France, selling a French property usually leads to a taxable gain under French law.
The combined tax burden for non-residents on property gains is generally 36.2%, made up of 19% capital gains tax and 17.2% social levies, although under certain conditions the social charge component can be reduced.
That said, there are legal strategies and specific exemptions that can lower or even eliminate the capital gains tax for non-resident sellers. Understanding how these work is key to effective tax planning when selling French property.
How French Capital Gains Tax Works for Non-Residents
French capital gains tax is based on the difference between what you paid for your property and the net price when you sell it, after permitted deductions. As a non-resident, your gain is taxed under the same basic framework as for French residents, except that your exposure is limited to French-source gains.
The total effective rate for non-residents is usually 36.2%, including:
- 19% flat capital gains tax
- 17.2% social security contributions
In practice, this can vary depending on your country of residence and whether special tax treaties or EU/EEA rules apply to your situation.
Strategy 1: Benefit from Reduced Social Charges
While the standard social levy for non-residents is 17.2%, residents of many European countries do not pay the full amount.
If you live in a country within the EU, European Economic Area (EEA), or Switzerland and are affiliated with its compulsory social security system, the usual CSG/CRDS charges are often replaced by a 7.5% solidarity contribution instead.
Even after Brexit, British residents may still qualify for this reduced levy under transitional arrangements in some cases, though this can depend on your exact situation and the interpretation of bilateral agreements.
In contrast, residents of other countries with no social security coordination agreement will typically pay the full 17.2% social charge on top of the capital gains tax.
Strategy 2: Hold the Property Longer for Taper Relief
France offers taper relief, automatic reductions in taxable capital gains, based exclusively on how long you’ve owned the property. The longer you hold it, the lower your tax bill:
- For the capital gains tax portion (19%), taper relief begins after 5 years of ownership and increases each year until full exemption at 22 years.
- For social charges, similar relief applies, but the full exemption takes longer, typically 30 years of ownership.
This means that if you’re not in a hurry, simply waiting to sell can dramatically reduce, or ultimately eliminate, the French capital gains tax due.
Strategy 3: Use Specific Exemptions for Former Residents
France provides special exemptions for non-residents who were previously tax residents and are selling their former principal home.
If you lived in France and sell your primary residence within a defined timeframe after leaving the country, capital gains tax may be completely exempt, subject to conditions such as:
- The sale must generally occur by December 31 of the year following your change of residence.
- The property must not have been rented or made unavailable during the period between departure and sale.
These rules are technical and depend on exact dates and how long you owned and lived in the property.
Another related exemption, also subject to conditions, may allow non-residents of the EU/EEA selling a non-principal home to exempt up to €150,000 of capital gain if they meet residence and timing criteria.
Strategy 4: Check Double Tax Treaties
Many countries have double tax treaties with France. These agreements are designed to prevent you from being taxed twice on the same gain, once in France and again in your country of residence.
While treaties do not usually eliminate French capital gains tax, they often provide credit mechanisms, so tax paid in France lowers the tax you owe at home. Consult a tax advisor to confirm what applies between France and your residence country.
Strategy 5: Proper Tax Representation and Documentation
Non-resident sellers must often appoint a French tax representative for capital gains purposes, especially if:
- The sale price is above a certain threshold (e.g., €150,000)
- The property is owned through a corporation or holding structure outside the EU/EEA
- Ownership has been less than 30 years
A tax representative’s role is to ensure correct tax reporting and payment on your behalf, crucial for avoiding penalties.
Additionally, keeping detailed records of property costs, including acquisition price, notary fees, and documented renovation expenses, helps maximize allowable reductions in the taxable gain.
Main Residence and Other Exemptions
As with residents, a primary home in France is typically exempt from capital gains tax if it’s your main residence at the date of sale (with specific timing conditions for non-residents).
In other cases, high qualification conditions may allow the application of a one-off partial exemption for certain non-resident sellers.
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The author: Géraud is the co-founder of The French Tax Representative and a chartered accountant by training, specialising in real estate and international clients since 2017. He and his team help several hundred individuals and companies each year with their French tax management.