A French tax resident who sells an apartment or house located abroad in principle realises a capital gain taxable in France, in addition to any taxation in the country where the property is located. Tax treaties may, in some cases, make it possible to avoid double taxation (which needs to be checked by a lawyer), but the sale must in principle be declared in France.
This article details the calculation of the gain under French rules: acquisition price, costs, works, allowances for the holding period and tax rates. It does not deal with the taxation of the country where the property is located, on which a local professional may be consulted. The filing formalities are presented in the article on form 2048-IMM.
In brief
- The gain is equal to the sale price less the acquisition price, increased by acquisition costs and certain works.
- After five years of ownership, an allowance applies, as a general rule: exemption from income tax after 22 years and from social security contributions after 30 years.
- The gain is in principle taxed at 19% income tax and 17.2% social security contributions, with an additional tax above €50,000.
- Depending on the tax treaty, France may, in some cases, grant a tax credit or exempt the gain, which only an analysis of the situation by a lawyer can confirm or rule out; in the latter case, it is reported on return no. 2047.
- Form 2048-IMM is in principle filed with payment within one month of the sale; for property located abroad, these formalities are in principle the seller’s responsibility.
Contents
Who is taxable in France?
A French tax resident is in principle taxable in France on all his or her income and gains, including those realised abroad. The sale of real estate located outside France is therefore in principle subject to the French regime for individuals’ real estate capital gains, subject to the applicable tax treaty. Non-residents are in principle not taxable in France on the sale of property located abroad.
The role of the tax treaty
Most tax treaties concluded by France allocate the right to tax real estate gains to the State where the property is located. Where France is the seller’s State of residence, only an analysis of the situation by a lawyer can determine whether or not double taxation may be eliminated, and how:
- either by a tax credit set off against French tax, equal, depending on the treaty, to the corresponding French tax or to the tax paid abroad up to the amount of French tax;
- or by an exemption in France; the gain is then not declared on form 2048-IMM, but reported on return no. 2047.
In the absence of a treaty, the gain remains in principle taxable in France, even if it has also been taxed in the country where the property is located: there is then double taxation. Contrary to a widespread belief, paying tax in the country where the property is located does not therefore, in itself, exempt the seller from any declaration in France.
Calculating the gain
The gross gain is equal to the difference between the sale price and the acquisition price. The sale price is the price stated in the deed, less certain costs borne by the seller (for example agency fees payable by the seller). The acquisition price is the price paid on purchase, as stated in the deed, or the value used for a gift or an inheritance. Where these prices are expressed in a foreign currency, they are in principle converted into euros at the exchange rate on the date of each transaction.
The acquisition price may be increased by:
- acquisition costs (notary fees, registration duties, etc.), for their actual documented amount or at a flat rate of 7.5% of the purchase price;
- construction, reconstruction, extension or improvement expenses, for their actual documented amount or, where the property has been held for more than five years, at a flat rate of 15% of the purchase price.
Rental or maintenance expenses (painting, wallpaper, carpets, etc.) cannot be added, unless they are inseparable from extension or improvement works, nor can expenses already taken into account for income tax purposes, for example as part of rental income.
The allowance for the holding period
Where the property has been held for more than five years, the gross gain is reduced by an allowance for the holding period, which differs for income tax and for social security contributions: 6% per year from the sixth to the twenty-first year, then 4% in the twenty-second year for income tax; 1.65% per year from the sixth to the twenty-first year, 1.60% in the twenty-second year, then 9% per year thereafter for social security contributions. The holding period is calculated in twelve-month periods from the acquisition.
| Holding period (full years) | Allowance for income tax | Allowance for social security contributions |
|---|---|---|
| Less than 6 years | 0% | 0% |
| 6 years | 6% | 1.65% |
| 10 years | 30% | 8.25% |
| 15 years | 60% | 16.50% |
| 20 years | 90% | 24.75% |
| 21 years | 96% | 26.40% |
| 22 years | 100% (exemption) | 28% |
| 25 years | 100% | 55% |
| 30 years | 100% | 100% (exemption) |
The tax rate
The net gain is in principle taxed at the flat rate of 19% income tax, plus social security contributions at 17.2%, i.e. 36.2% in total. Where the net gain taxable to income tax exceeds €50,000, an additional tax of 2% to 6%, depending on its amount, also applies.
Worked example
A French tax resident sells in 2026, for €2,800,000, a house located abroad that was bought for €1,200,000 twenty years earlier. He uses the flat rates of 7.5% for acquisition costs (€90,000) and 15% for works (€180,000): the increased acquisition price is €1,470,000, and the gross gain €1,330,000.
- Income tax: after the 90% allowance, the base is €133,000, i.e. €25,270 of tax at 19%.
- Social security contributions: after the 24.75% allowance, the base is €1,000,825, i.e. €172,142 at 17.2%.
- Additional tax: due, as the net taxable gain (€133,000) exceeds €50,000; at this level, its rate is 3%, i.e. €3,990.
French tax thus amounts to around €201,402 (not counting any exceptional contribution on high incomes), before taking the tax treaty into account. If the treaty provides for a tax credit, the tax paid in the country where the property is located may be deducted from French tax, within the limits provided; if it exempts the gain in France, no French tax is in principle due on that gain. Only an analysis of the situation by a lawyer can determine whether or not the treaty leads to one of these outcomes. Whether a tax credit can be set off against social security contributions depends on the terms of the treaty and deserves to be examined.
Filing and payment
The gain is declared on form no. 2048-IMM (or no. 2048-TAB for building land), filed in principle with payment of the tax within one month of the sale, with the registration office competent for the seller. For property located in France, these formalities are in principle carried out by the notary; for property located abroad, it is in principle up to the seller to carry them out and pay the tax himself or herself. A copy of the deed of sale translated into French is in principle attached; a non-certified translation may suffice. The gain is then, as a general rule, reported on the following year’s income tax return.
Where the gain is fully exempt, from both income tax and social security contributions (for example after 30 years of ownership), or in the event of a loss, no form 2048-IMM is in principle filed. The formalities are detailed in the article on form 2048-IMM, and the firm can, if needed, take care of these returns.
FAQ
Must the sale of property located abroad be declared in France?
In principle yes, for a French tax resident: the gain is declared on form 2048-IMM, unless it is exempt, in particular under the tax treaty (to be checked by a lawyer; it is then reported on return no. 2047) or fully exempt, from both income tax and social security contributions, as a result of the holding-period allowance.
Does tax paid abroad reduce French tax?
Depending on the tax treaty, France may, in some cases, grant a tax credit set off against French tax or exempt the gain; only an analysis of the situation by a lawyer can determine whether or not the treaty allows this. In the absence of a treaty, the gain remains in principle taxable in France without a tax credit.
After how many years is the gain exempt?
In principle after 22 years of ownership for income tax and after 30 years for social security contributions.
