All information provided is for general guidance only. You are encouraged to seek professional advice from experts on all questions relating to French property law, inheritance law and taxation. Should you require advice on these subjects, we can put in you in contact with a trusted French tax expert.

All France Home Finance clients receive our free guide to purchasing in France and tax implications. 

What charges and running costs should I be aware of when buying property in France?

How do I know if I'm considered a French tax resident or not?

Are French taxes for property ownership different if I don't live in France?

What French taxes apply if own French property?

What property related tax deductions can I claim for my French income tax?

Which tax forms do I need to file?

What charges and running costs should I be aware of when buying property in France?

For apartments or condominiums, you can expect to pay “charges de copropriéte”. These are monthly or quarterly maintenance and service charges that relate to the common areas of the building.

Other running costs often include but are not limited to: annual French property tax (taxe foncière), annual occupancy tax (taxe d'habitation), electricity, water, heat, internet, telephone, home insurance and garbage removal if in the countryside.

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How do I know if I'm considered a French tax resident or not?

As reported on France's government tax website -

You have your tax residence in France if one of the following criteria is met:

• You have your household there or, if you do not have a household, it is the location of your main abode
• You have your household in France if you live there most of the time and permanently with your spouse (or civil partner and/or children) or alone.
• If you do not have a household, the location of your main abode will be established based on your actual presence in France (you stay more than 183 days on French territory)
• You have a professional activity in France, as an employee of otherwise, unless this activity is secondary
• You have a professional activity in France as a primary occupation if you devote the majority of actual time to it.
• The centre of your economic interests is in France
• A person who has more income from French sources than income from foreign sources therefore has the centre of their economic interests in France.

However, a country other than France may, on the basis of its own national legislation, consider that you also meet the criteria to be a resident of that country.

In such cases, in order to determine in which of the two countries you are a resident for tax purposes, please refer to the applicable tax treaty.

The status of resident of France for tax purposes

A person who has their tax residence in France and who pays their taxes there may be considered as a French resident.

If a person may be considered as being resident for tax purposes in both France and another country, this conflict can be settled by referring to the “Resident” article of the tax treaty to determine this person’s country of residence.

To settle this conflict of residence, the “Resident” article sets out four criteria to be examined successively:

• Permanent home: The permanent home is any form of accommodation at your disposal and that is reserved for your use (house, flat, furnished room, lent accommodation, etc.).
• Centre of vital interests: The centre of vital interests is determined by analysing your personal and economic ties with each of the two countries.
• Habitual abode: This is a matter of determining the country in which you usually live (physical presence in the country)
• Nationality: This means that it is only following analysis of these criteria that you will be considered as a resident of one or other of the countries.

Tax implications of being a resident of France for tax purposes

If you are a resident of France for tax purposes, you are taxed on your income from French and foreign sources subject to international tax treaties.

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Are French taxes for property ownership different if I don't live in France?

Many people are surprised to learn that if you are a tax resident of France, you must declare all your worldwide income and assets, no matter which country the income was earned in or where the assets are held. The various types of income will be treated and taxed differently based on the country of origin. There are many tax treaties in place between France and other countries to avoid double taxation. See below for French taxes that apply for non-resident French property owners.

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What French taxes apply if own French property?

You are responsible to pay the following taxes whether you are a French tax resident or not.

Property owner’s tax (“taxe fonciere”): 

This annual tax is paid by the owner of the property based on the size and location of the property. As Paris is a very densely populated area, the tax has remained quite low over the years. The agent or seller will disclose this tax as part of the property information. For example, for a 75 m2 apartment in central Paris, it can be 700 to 900 euros.

Property user’s tax (“taxe d’habitation”): 

This annual tax is paid by the user of the property. If you rent your property long term, it can be passed on to the renter. It is based on the size and the location of the property but also on the revenues of the occupant to some effect so the seller cannot disclose what it will be for the buyer. It is often very close to the amount of the property owner's tax.

The bill for the taxe foncière is sent out in September and payable in October, whilst the bill for the taxe d'habitation in October and payable in November.

The first paper bill will arrive at your French address by the post the year after your purchase. After that, you need to set up a monthly direct debit payment from your French bank account so you don't miss the post and forget to pay. Please make note of this, clients often forget.

Income tax:

You must declare income that originated in France to the French tax authority. Examples of taxable French income include:

• Rental income from French property
• Income from stocks or bonds invested in France
• Capital gains on sale of French property
• Inheritance tax on transfer of ownership of French property (even if you die outside of France)

Wealth tax - “IFI” or “impot de solidarité sur la fortune immobilière”: 

This tax is calculated on the total fair market value of all your real estate assets owned in France less any French loans outstanding on the property. Therefore taking a French mortgage can help you reduce or avoid this tax.

Note that the wealth tax is only triggered when you own more than 1.3 million € net of debt. Once triggered, it's taxed on a sliding scale beginning at 800 000 € of assets net of debt.

If you are a French tax resident, the “IFI” will be computed on your worldwide real estate properties. Interest only mortgages do not qualify for full deductibility. They will be treated like an amortizing loan for the IFI tax calculation. 

The 3% property tax:

For French companies that own property such as a French SCI or SARL company or foreign companies like a trust, the 3% property tax may apply. Historically, this tax was created to prevent property owners from avoiding payment of various other taxes (such as the IFI property wealth tax) by using corporations to mask property transactions between individuals. 

The 3% tax is assessed on the market value of the French property annually. Unlike the IFI tax, you cannot deduct outstanding mortgages from the assessed value. The tax either must be paid by the foreign company owner of French property or the company must make an annual declaration of their shareholder to the French tax authority so the appropriate wealth tax can be individually assessed. 

The simple solution to avoid paying this tax is to declare all owners of a company to the French tax authorities. We can connect you with trusted partners to manage this process and any other required declarations relating to SCI and SARL property ownership.

There are many tax treaties in place between France and other countries to avoid double taxation therefore it is important to seek expert advice to minimise fiscal imposition.

Capital gains tax:

For a property that is not your main residence, capital gains tax after a sale starts at approximately 36.20% (19% of income tax and 17.20% of social charges) and is progressively reduced each year starting after 6 years to arrive at 0% after 30 years. Therefore if you hold your property long enough, you won’t pay any capital gains tax at sale. 

There is no capital gains tax on your primary residence, assuming you are a French tax resident.

For all types of properties (except building land), the capital gain is totally exempt:
• from the capital gains part of the tax: after 22 years of ownership,
• from the social charges part of the tax: after 30 years of ownership.

You can deduct certain expenses to arrive at the taxable amount for capital gains such as:

• purchasing costs (taxes on transaction, notaire fees, estate agent fees)
• renovations or improvements (either itemized or a standard 15% reduction)

Inheritance tax:

Also called “droits de succession”, this is a tax on gifts and inheritances to be paid by each beneficiary. The tax applied is based on a rising scale and depends on the amount inherited/gifted and their relationship to the deceased/donor. This tax applies for both French residents and non residents, when the asset being gifted or bequeathed is located in France.

TOP TIP – Inheritance tax is a complicated and potentially expensive subject and requires advance planning and the expert advice of a French Notaire. Contact us to be put in contact with one of our trusted partners.

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What property related tax deductions can I claim for my French income tax?

Taxable income from rental properties in France can be reduced by the following expenses:

• interest paid on your French mortgage
• renovation expenses
• land tax (taxe foncière)
• management fees
• depreciation (in some cases)
• legal fees for the act of sale (in some cases)

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Which tax forms do I need to file?

The following forms commonly apply to international buyers of property in France:

• Form 2042 is the main tax from used to declare your worldwide income (or French income if you are a non-resident.)
• Form 2042 C is an additional form used when you have rental income from furnished property, if you have paid any tax in another country that can be offset against French tax or income from a personal business.
• Form 2042-IFI if you are subject to the French property wealth tax (see above for more details on this.)

It's always best to have professional advice when completing your French tax return. We'll be happy to put you in touch with a trusted partner.

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