In France, the capital gain on the sale of a primary residence is exempt from any tax. But the capital gain on the sale of a second home or investment property is liable to tax and social charges. We explain the current rules here.
French law lays out specific rules relating to properties sold by individuals who are now or have recently been fiscally domiciled in France. Primary residence is a fiscal status, not an immigration status: it may be possible to file income taxes in France with a primary residence in the country even before (or without) emigrating to France.
Sale of your primary residence
There is no capital gains tax on the sale of a primary residence in France. Technically, there is no minimum period of residency: once a property is the owner’s primary residence for fiscal purposes, the property can be sold without paying any capital gains tax.
People who have been fiscally domiciled in France and then leave to become a tax resident elsewhere are not liable for CGT on their primary residence, provided that the sale is completed before their departure.
Primary residences sold after departure from France
If the property is not sold before departure from France, the sellers become liable for tax and social charges on any capital gain. But they benefit from additional tax relief of €150,000 per seller of the property, provided they fulfill the following conditions:
- The seller must be an individual, not a company.
- The seller must be a national of a European Union state or of a state that is party to the European Economic Area agreement and has signed a tax evasion/fraud prevention convention with France.
- The seller must have been fiscally domiciled in France for a consecutive period of at least two years at some point prior to the sale.
- The sale is finalized by December 31stof the fifth year following the seller’s transfer of fiscal domicile outside France. Alternatively, there is no time limit, provided the seller has had free access to the property since the 1st January of the year preceding that of the sale.
These rules apply to capital gains realized on sales finalized since January 1st 2014 and are restricted to one property per seller.
The good news is that the €150,000 applies per seller. A co-owning couple, regardless of marital status, will therefore benefit from a €300,000 reduction in the capital gain. Prior to the
The relief is applied after other deductions have been taken into account. Sellers are entitled to tax relief according to the length of time they have owned the property.
It makes good sense to put your property on the market as soon as possible if you know you are leaving France. And, as always, professional legal advice is crucial.