Real estate taxes and taxation in France

When acquiring, owning or reselling real estate, several taxes and tax obligations apply. A good understanding of these mechanisms is essential to anticipate costs and optimize your wealth strategy. This section discusses in detail the main tax aspects related to real estate ownership: property tax, rental taxation and real estate capital gains taxation.

Property tax

What is property tax?

The property tax is a local tax payable each year by the owners of a property, whether they are occupants, landlords or owners of vacant premises. It is collected by local authorities and contributes to the financing of local public services (schools, infrastructure, maintenance of green spaces, etc.).

How is it calculated?

The property tax is calculated on the basis of the cadastral rental value of the property, i.e. the theoretical annual rent that the property could produce if it were rented. This value is then multiplied by the rates voted by the local authorities (municipality, department).

• Taxable base: Cadastral rental value of the property.
• Tax Rate: Set annually by local authorities.

Variability by municipality

Tax rates vary greatly from one municipality to another, with sometimes significant differences. In addition, there may be specific additional taxes voted by certain local authorities.

Exemptions and possible relief

Certain situations allow you to benefit from total or partial exemptions from property tax:

• Temporary exemption (2 years) for new housing.
• Permanent exemption for the elderly or disabled subject to means testing.
• Discount for energy-efficient housing.

Useful tool: Consult the precise amount of your property tax on impots.gouv.fr.

Practical example:

A property with a cadastral rental value of €10,000 and a municipal tax rate of 20% will have a property tax of: €10,000 × 20% = €2,000 per year.

Rental taxation

If you rent out your property, the income received is subject to tax. There are two main regimes depending on the type of rental: furnished rental (LMNP/LMP) and bare rental (property income).

A. Furnished Rentals (LMNP and LMP)

Furnished rentals benefit from a specific tax regime:

• LMNP (Non-Professional Furnished Landlord ): Rental income of less than €23,000 or representing less than 50% of the household's income.
• Micro-BIC: Flat-rate allowance of 50% on the rents received.
• Actual regime: Deduction of actual expenses (interest, works, depreciation, etc.).
• LMP (Professional Furnished Landlord ): Income above the LMNP ceiling, with partial exemption from capital gains after 5 years.

B. Bare rental (property income)

Rents received in bare rental are taxed as property income. Two regimes:

• Micro-land: Income of less than €15,000 per year, flat-rate allowance of 30%.
• Actual regime: Deduction of actual expenses (interest, property tax, works, co-ownership, etc.).

C. Taxation specific to seasonal rentals

• Tourist tax: To be collected from tenants and donated to the municipality.
• Micro-BIC regime: Allowance of 50% (classic) or 71% (classified furnished tourist accommodation).

Astuteness: Estimate your rental tax on the official tax simulator.

Practical example:

A landlord receives €12,000 in annual rent:

• Micro-BIC: Taxation on €6,000 after a 50% allowance.
• Actual regime: Deduction of €4,000 in charges → Taxation on €8,000.

Real estate capital gains

What is it?

The capital gain on real estate corresponds to the difference between the sale price and the initial purchase price, after deduction of the costs and work carried out.

The tax system

• Flat-rate taxation at 19%
• Social security contributions at 17.2% → That is a total tax of 36.2%.

Possible exemptions

• Main residence: Total exemption.
• Long-term detention: Progressive exemption from 5 years, total after 22 years (income tax) and 30 years (social security contributions).

Calculation of the taxable capital gain

Gross Capital Gain = Sale Price - (Purchase Price + Costs + Works)

Practical example:

• Purchase price : 200 000 €
• Sale price : 300 000 €
• Costs and works: €20,000
• Gross capital gain: €80,000 → Taxation: €80,000 × 36.2% = €28,960

Useful tool: Simulate your added value on service-public.fr.