Own a rental property in France? We created this ultimate French tax guide just for you!

Am I a resident or non-resident of France for tax purposes?

Broadly speaking, you will be considered a resident in France if you live in the country for at least 6 months throughout the year, and this rule does not require that you have a permanent home there. 

However, there are some circumstances where this 6-month rule cannot apply – for instance, business owners and professionals who travel frequently may not be considered residents, even though they have a permanent home in France.

In these cases, the French authorities will review the private circumstances for a period longer than a year to determine the residency. 

Having said that, you could be considered a resident, even though you spent less than 6 months in the country but in the end, you’ve spent more time in France than in any other country. 

Can I be a tax resident in two countries?

Yes, depending on your circumstances, it is possible to be considered a tax resident in two countries. 

In such cases, you need to have a look at the double taxation agreements between the two countries to determine where you should pay tax. 

The double taxation agreement should prevent you from being taxed more than once on the same income.

PTI Returns will help you avoid double taxation and remain tax-compliant both in France and in your home country.

Double tax treaties between France and other countries

France has signed tax treaties with more than 120 countries within the European Union and with countries outside the European Economic Zone. The list includes:

Do you want to learn about our French property tax return filing service?

When you apply through this contact form a tax advisor will contact you.

I bought a property in France, what taxes should I pay?

Notary fees or registration fees

The total taxes and fees will depend on the type of property you decide to purchase.

Let’s say that you purchase an old French property. The taxes and the transfer of ownership costs for the purchase of an already existing real estate are around 7% and 10%  of the purchase price, excluding real estate agents’ fees. The registration fees are around 5.08%-5.09%.

If you decide to buy a new French property that is less than 5 years old, you will pay around 2%-3% registration and transfer fees, plus VAT (20% on the purchase price). The registration fees included are around 0.7% of the purchase price. 

The notary fees are only about 1%. 

These fees are variable, so it’s a good idea to discuss this with a tax advisor so that you are aware of them before the purchase. 

French rental income tax – furnished and unfurnished rentals

French income tax

If you are a non-resident taxpayer and you receive income from a French source (when you are renting out the property), you are obliged to declare it and file a French tax return for non-residents (also known as a French tax declaration or French income tax return). 

It’s important to remember that there is no reporting threshold, which means that any profit should be reported, even if it’s non-taxable. 

When filing your income tax return, you can decide to calculate your tax using the average rate for your worldwide income.

If not, your income will be taxed at a minimum of 20% for earnings up to €28.797 and 30% for anything beyond this amount.

Opting for the average rate is recommended because it only applies when it’s more advantageous for you.

The rate of social charges and income tax on profit from French sources for EU residents is 27.5% ( = 20% income tax and 7.5% social charges ) if it does not exceed the threshold mentioned above. 

Social charges for non-EU residents are 17.2%. So, the combined rate of social charges and income tax will increase from 37.2% (20%+17.2%)to 47.2%(30%+17.2%), and this depends on the threshold. 

Rental income in France is taxed differently depending on whether you rent out furnished or unfurnished lettings.

Unfurnished Rentals

When the property is rented out without furniture, the landlord has two options for declaring the rental income:

If a taxpayer’s rental income is less than €15,000 per year, they may elect to be assessed under the Régime Micro Foncier. In this approach, the tax authorities apply a flat-rate 30% cost deduction and filers include gross rental revenue on their personal income tax return.

The alternative, known as the Régime Réel, is applicable if the taxpayer elects to be taxed under this system or if their rental income surpasses €15,000.

The rental income and related expenses are reported on a particular form that is included with the annual tax return (in compliance with a list of expenditures established by law).

Furnished Rentals

There are also two choices available to landlords of furnished properties:

If rental revenue is less than EUR 77.700 per year, taxpayers may elect to be assessed under the Régime Micro-BIC.

Under this arrangement, taxpayers deduct costs at a flat rate of 50% from their personal income tax returns and include gross rental income.

The alternative, known as the Régime Réel Meublé, is applicable if the taxpayer chooses to be taxed under this system or if their rental income surpasses EUR 77.700.

In the Régime Réel, actual expenses are considered for calculating the net taxable figure. 

Got questions on French property tax? You can request a free call back from a tax professional.

Capital gains tax in France

Here, we will discuss how much tax you will pay when you sell your property in France. 

There is no longer a higher rate of capital gains tax for non-residents who live outside the European Economic Area (EEA)*.

If you are a non-resident, the applicable French tax rate is the same – 19% Capital Gains Tax, plus 17.2% social charges, and the total charge is 36.2%. 

There is a tapered relief against the tax that is granted, starting from the 6th year of ownership:

• The first 5 years of ownership – No allowance.
• Ownership between 6th and 21st years – 6% allowance per year. 
• Ownership for the 22nd year – 4% allowance. 

You can avoid paying capital gains tax after 22 years and social charges after 30 years of ownership.

Non-residents from the EEA* benefit from a lower rate, as they are also exempt from the social charges, but pay the solidarity tax of 7.5%.

Moreover, if a non-French tax resident sells a property in France, the capital gain may be tax-free under the following conditions:

1. The sale happens before the end of the tenth year after leaving France, or
2. If the residence hasn’t been rented or occupied by a third person since January 1 of the year before the sale, there is no time restriction.

The individual should have been a French tax resident for at least two years at any time before the sale. This exemption applies to one property per tax household, and the net capital gain should not exceed EUR 150,000.

This exemption is also applicable to nationals of non-EU countries that have a non-discrimination clause in their tax treaty with France.

*EEA – The EEA consists of EU nations along with Iceland, Liechtenstein, and Norway, enabling their participation in the EU’s single market. While Switzerland is not an EU or EEA member, it is part of the single market.

Social charges

A tapered relief is granted, starting from the 6th year of ownership:

• The first 5 years of ownership – No allowance.
• Between 6 and 21 years of ownership – 1.65% per year.
• For the 22nd year of ownership – 1.60% only in this single year. 
• Between the 23rd year and the 30th year of ownership – 9% per year. 

This table shows the percentage discount for capital gains tax and social charges for each year of ownership. Keep in mind that it does not take into account the ‘solidarity tax’ so you should assume 7.5% throughout.

Table: Capital Gains Tax Allowances for Duration of Ownership

Taxe d’Habitation (Housing tax in France)

The housing tax, known as Taxe d’Habitation, is a yearly property tax imposed on furnished second homes, including their related structures like garages and outbuildings. 

The specific dates for paying this tax vary each year. 

The tax is based on the characteristics of your real estate like location and others.

It also varies considerably and is determined by each municipality. 

This tax is based on where you live on 1 January, even if you move later in the year. Here are some situations:

1. If you own a vacant rental property, you have to pay the housing tax.
2. A tenant with a secondary residence on January 1st, 2023, has to pay the full-year housing tax, even if they move during the year.
3. Those living in a company-provided residence as a secondary home on the first day of the year have to pay the housing tax for the whole year.

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Taxe Fonciere – French land tax 

This tax is an annual, local French land ownership tax and is imposed on the owner, whether or not the property is occupied or rented out. 

Taxe Fonciere is payable on all homes whether they are used as permanent residences or used as holiday homes.

The tax is payable by the person(s) who own the real estate on 1st January. 

Taxe Fonciere is also considered “land tax” and the owner must pay it even if there are no buildings there. The amount owed is calculated by the local authorities.

The Taxe Foncière includes other additional taxes and charges, such as a charge for the collection of rubbish (taxe d’enlevement des ordures ménagères) for those municipalities where this service is provided. 

What is the difference between Taxe Fonciere and Taxe d’Habitation?

Taxe Foncière is a French land tax and the owner of the real estate pays it even if there is no house on the land.

Taxe d’Habitation is a housing tax, and it should be paid by those who are living in the property on 1 January, whether it is an owner or tenant. 

The main difference between Taxe Foncière and Taxe d’Habitation in France is who pays them and for what purpose:

1. Taxe Foncière:

   • Paid by: Property owner
   • Purpose: Tax on the property itself (land and buildings)

2. Taxe d’Habitation:

   • Paid by: Occupant on January 1 (owner or tenant)
   • Purpose: Tax on the use of the property as a residence

Both Taxe Foncière and Taxe d’Habitation apply to residents and French non-residents, and the demands for these taxes must be sent annually.

Taxe Foncière is typically issued in September, and payment is due by 15 October. If making an online payment, the deadline is extended to 20 October(or 25th with a bank levy), and there is also an option to opt for monthly payments.

For the residence tax, Taxe d’Habitation, the bill is sent out in late September or early October, with a payment deadline of 15 November. Monthly installment payments can be arranged upon request.

As for the CFE tax bill, the deadline for payment is 15 December annually.

If you fail to pay on time, you will be hit with a 10% penalty. 

Tax on real estate wealth – Wealth tax in France (IFI)

You need to file a property wealth tax (IFI) return only if the total value of your taxable properties is over €1.3 million on 1 January.

If you live outside of France, only real estate located in the country is taken into account, and any tax treaty between your country and France will be considered. 

Impôt sur la Fortune Immobilière (IFI) is an annual wealth tax on property in France. The tax-free allowance is €800,000 after that rates start at 0.5% and rise progressively up to 1.5%. 

Once you go over 1.3 million euros, the tax calculation starts from 800.000 euros. For instance, if your property is worth 1.4 million euros, the IFI is also calculated in the range between 800.000 and 1.3 million euros, which is 500.000 euros at a rate of 0.5%.

If you are a non-resident in France, your taxable assets consist of:

• real estate rights and property in France
• the shares you possess in property companies holding real estate in France
• the shares you possess in property companies holding real estate in France and abroad, up to the amount of the rights and property owned in France

The taxable assets are:

• apartments, houses, and their outbuildings (parking, cellars, garages) for rent or personal use
• buildings/ historical monuments
• buildings under construction
• agricultural land, building plots, and other non-built buildings
• fractions of buildings (buildings) held via shares in companies
• certain real estate is exempt, such as rural property leased on a long-term basis, forests, woods, etc
• real estate rights and property that does not meet the criteria to be considered professional property 

Wealth tax tax rates in France (IFI tax rates):

Fraction taxable	Rate of tax
€0 – €800,000	0%
€800.000 – €1.30.000	0.50%
€1.300.000 – €2.570.000	0.70%
€2,570,000 – €5.000.000	1%
€5.000.000 – €10.000.000	1.25%
€10.000.000+	1.50%

Keep in mind that the assessment to get to net taxable wealth is complicated and it’s a good idea to get professional French tax advice. 

There is a discount that applies on net wealth between €1.3 million, and €1.4 million which is worth around several hundred euros. 

If the tax authorities decide that you are subject to IFI tax, they have the right to collect any overdue liabilities with penalties over the previous ten years. 

The deadline for the French property tax return is usually the end of May or the beginning of June. 

Are there any deductible debts?

Deductible debts can be expenses related to the improvement of the property, extension, reconstruction, maintenance of the real estate, or any taxes related to the property (for instance property tax).

The debts that could be subtracted must meet these criteria:

• be related to taxable assets
• be dependent on a member of the tax household
• exist as of January 2021

 

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What is Cotisation Foncière des Entreprises – CFE tax France?

CFE tax in France is paid annually by owners of furnished real estate in France and is based on the theoretical rental value of the property. If the rented property is leaseback or unfurnished, no CFE is due.

The tax is usually between €100 and €1.500. The great news here is that most property owners pay too much CFE tax and are entitled to a tax refund. 

Who is exempt from CFE tax in France? 

Homeowners will not have to pay CFE tax in their first year of ownership or if their annual turnover is less than €5.000.

PTI Returns can help you claim a CFE refund if it is overpaid. 

Can you reclaim VAT on the buy-to-let purchase in France?

The regular VAT rate in France is 20%, but if you’re buying certain properties (like new buildings, land for construction, sales under construction, or construction projects) in special zones called ANRU zone (urban development and renovation zone) or in QPV (priority districts of city policy), you can get a lower rate of 5.5%.

Foreign and French buyers who choose to rent out newly built property as leaseback in a tourist area could save 20% on the purchase price through a VAT refund.

If the property is sold before 20 years of detention and not as leaseback, the VAT must be paid back to the French tax authorities, pro-rated of the years of detention.

If the owner decides to sell the property or take it out from the real estate market, then they must pay back a portion of the VAT (on a pro-rata basis). 

PTI Returns can help with the submitting of the French property tax return and VAT return. 

Contact us for more information

How to avoid overpaying tax on rental income from your French property?

No one wants to pay more tax than they have to.

With the complex French tax requirements, forms, and declarations, it can be rather confusing to understand all your rights, obligations, and allowable exemptions. That’s why seeking French tax advice from professionals can save you a lot of time and stress.

Here, you can find tips on reducing property income tax for overseas landlords.

What are the changes for UK resident landlords of French properties after Brexit?

Higher social charges on French rentals and gains on French property for UK citizens, limits on time spent in France, rising costs, and administration are all consequences of Brexit.

As UK citizens are no longer EU citizens, this will affect their French tax requirements.

They will be taxed on the profits from their French property under the terms of the double taxation agreement between France and the UK.

If you are renting out a French property as a UK resident the income from real estate is taxed at 20% for up to €28.797 and at 30% for income bigger than that.

If the landlord is prepared to make a full declaration of their worldwide income and gains to the tax authorities in France, these tax rates could be reduced.

Social charges on rental income in France are determined using three rates, and the total amount can go up to a maximum of 17.2%.

They include:

• Contribution sociale généralisée (CSG): 9.2%
• Contribution au remboursement de la dette sociale (CRDS) or Contribution to the repayment of social debt: 0.5%
• Prélèvement social (PSOL) or Solidarity tax: 7.5%

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From January 1, 2021, UK citizens are paying all three of these social charges, instead of only PSOL. This is an increase from 7.5% to 17.2%.

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CRDS and CSG only refer to non-residents (EEA countries plus Switzerland) who are not covered by the social security system of another European country. 

Furnished lettings must be properly registered with a unique business reference number known as SIRET because it is treated as a commercial activity. 

Without needing to apply for a visa, UK residents will be able to visit for 90 days every 180 days in any EU country in the Schengen zone. 

Stays for over 90 days will be allowed only if the citizen has a working or residence visa. This 90-day period includes time spent in all the EU countries, not just in one. 

If a UK citizen sells a property after owning it for more than 30 years, the benefit of the sale is excluded from Capital Gains Tax and social charges due to the use of taper relief.

In other situations, Capital Gains Tax would be 19% plus 17.2% social charges on the taxable gain, resulting in a total tax charge of 36.2%.

The CSG, CRDS, and PSOL, as mentioned above, make up the social charges. For gains made before 2021, only the PSOL is payable by a UK citizen with a UK NIC record. 

What are the US tax obligations for owners of French properties?

If you are an American citizen, you don’t need to report your investment in French property on your US tax return, unless the real estate is rented out.

If the property is not rented, you only need to keep the records of the purchase and any costs and expenses incurred as part of the purchase for when you decide to sell it. 

A notary or a French tax advisor can assist you in interpreting any applicable exemptions, calculating the tax owed, and paying the tax.

Capital gains may also be expected to be reported on your French income tax return.

Generally, in France, non-primary residence capital gains are taxed. The capital gains tax rate is 19% for all, with an additional “prelevements sociaux” (social security contributions)  of 17.2% for French tax residents and 15.5% for non-residents.

The selling of a property owned for more than 22 years is excluded from the capital gains tax, and the sale of a property owned for more than 30 years is exempt from “prelevements sociaux.”

Americans should report the sale on Schedule D and Form 8949, claim foreign tax credits for French taxes on Form 1116, and either pay the difference in taxes or carry forward their excess foreign tax credits for up to ten years.

Reporting requirements for property tax in France for non-residents

Purchase: None; keep strict records.

During ownership: If the property is not let out, keep good records. If you rent it out you will need to file a French tax return and keep detailed receipts of every rental property’s income and expenditures.

A French tax professional should be contacted for accurate information about your situation.

What are the income tax deadlines in France?

The deadlines for French income tax returns vary slightly every year and are announced in late spring. The deadlines for filing differ by département (101 regions in total).

Please, share your details with us until (we can file your tax return even after these dates but there may be penalties):

• 31/03/2024 for Leaseback and Furnished Lettings (Business tax returns)
• 15/04/2024 for Non-furnished and Micro income tax returns
  

Got questions about property tax in France? Request a free callback from a tax advisor.

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What happens if I have missed the deadline for my French tax return?

You can file your tax return later, but you will have to pay a fine. 

Depending on how late you file, you can expect to pay the following:

• 10 % – if you make your declaration before receiving formal notice from the tax office
• 20 % – if you submit your declaration within 30 days of receiving the formal notice
• 40 % – if you fail to make a declaration within 30 days of receiving the formal notice
• 80 % – if the tax office discovers that you are performing undeclared work or engaging in illegal activity without receiving formal notice.

In addition to this, you may be required to pay late interest on your French tax bill. 

Even if you are not required to pay income tax, you must still file a declaration to obtain a notice of non-taxation, which can be useful for certain administrative procedures.

However, you will not be penalized for making a late declaration.

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Summary of what is most important

Property tax in France for non-residents:

➥ You will be taxed on your property income as a non-resident in France if you live in the country for less than 6 months throughout the year.
➥ It is possible to be considered a tax resident in two countries.
➥ You need to have a look at the double taxation agreements between the two countries to determine where you should pay tax.
➥ France has signed tax treaties with more than 120 countries. So you can avoid double taxation and remain tax-compliant both in France and in your home country.
➥ French property tax for UK residents, as no longer EU citizens, will be taxed on the profits from their property under the terms of the double taxation agreement between France and the UK.
➥ Your real estate could be liable to French local taxes, income, succession, capital gains, and wealth taxes, which you need to comply with.
➥ You can claim the VAT back on the newly built leaseback rental property that you invested in France. 
➥ “Taxe foncière” and “taxe d’habitation” apply to residents and French non-residents.
➥ Do not forget you must file a French property tax return on income from your real estate each year. 
➥ If you have missed the deadline for your French tax return, you will have to pay a fine.
➥ You can avoid missing the deadlines and paying penalties, by turning to reliable French property tax filing assistance. This decision can also help you minimize your taxes.

Who can help me file my French property tax return online?

If you are earning rental income as a non-resident and have property expenses to declare, if you want to minimize your tax burden, and improve profitability, you will benefit from enlisting the services of a French property tax advisor for non-residents. Our team can handle all the documentation and file your French property tax return online.

At Property Tax International (PTI Returns), our tax experts specialize in French property tax returns for foreign property investors.

• We will handle all your French tax return preparation, and follow any changes in French legislation at a fraction of the cost of the local accountant.
• Our property tax specialists will minimize your tax liability by applying every international tax agreement, tax relief, and allowable expenses you are entitled to.
• PTI Returns will keep you updated throughout the process and communicate directly with the French tax office on your behalf. 
• PTI Returns has multilingual support via phone and email. Our tax experts can answer any of your international property tax-related questions.

The PTI Returns team will: 

• help you avail of all international tax agreements and allowable expenses
• help you avoid overpaying tax
• keep you up to date with the latest changes in legislation
• deal with the language barriers with the local tax office
• make the preparation and filing process easy and fast
• help you file your tax return and pay taxes online

So you can sit back and drink your coffee while we take care of all the filing.

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