In France, property taxes are divided into three main categories: taxes on acquisition, ownership, and sale. Here’s an overview of each:
1. Taxes on Property Acquisition
When you purchase real estate in France, several taxes and fees apply:
1. Registration and Notary Fees (Frais de notaire):
– Typically around 7–8% of the property price for resale (older) properties.
– For new properties (less than five years old), fees are lower at approximately 2–3%, as the registration tax is reduced.
2. VAT (TVA):
– Applies to new properties (included in the price). The standard rate is 20%, though it may be reduced to 5.5% for social housing.
3. Administrative Fees:
– A small fee charged for processing the sale, included in the notary fees.
4. Mortgage Registration Fee:
– If the purchase is financed with a mortgage, an additional fee is charged to register the loan guarantee. This is about 0.5% of the loan amount.
2. Taxes on Property Ownership
Once you own property in France, you are subject to annual taxes:
1. Property Tax (Taxe foncière):
– Paid by all property owners.
– The amount depends on the location, size, and cadastral value of the property.
– It consists of two parts:
– Tax on buildings.
– Tax on land (if applicable).
– Average rate: 0.2–1.5% of the cadastral value, which is often lower than the market value.
2. Housing Tax (Taxe d’habitation):
– Paid by those occupying the property as of January 1 (not necessarily the owners).
– As of 2023, this tax has been abolished for primary residences but still applies to secondary homes or vacation properties.
3. Wealth Tax (IFI, Impôt sur la Fortune Immobilière):
– Applies if your total real estate assets in France exceed €1.3 million.
– The tax rate is progressive, ranging from 0.5% to 1.5%.
3. Taxes on Property Sale
When selling property, sellers are subject to capital gains tax unless exempt:
1. Capital Gains Tax (Impôt sur les Plus-Values Immobilières):
– Calculated on the difference between the purchase price and the sale price.
– Standard rate: 19%.
– Additionally, a social contribution tax of 17.2% applies, bringing the total to 36.2%.
2. Exemptions:
– If the property is your primary residence, you are exempt from capital gains tax.
– For secondary properties, the tax decreases over time:
– Full exemption from capital gains tax after 22 years of ownership.
– Full exemption from social contributions after 30 years of ownership.
3. Additional Tax for Large Gains:
– For capital gains exceeding €50,000, an extra tax of 2% to 6% may apply.
Summary of Costs
– Acquisition: Expect to pay 7–10% of the property price in taxes and fees.
– Ownership: Annual taxes include property tax, and in some cases, wealth tax.
– Sale: Consider capital gains tax unless you qualify for an exemption.
