Property-related taxes

Being a property owner in France comes with various tax obligations. Whether it’s a rental property or a primary residence, it’s essential to understand the nature and functioning of the main taxes related to owning, operating, and transferring real estate. Here’s a clear guide to help you understand better.

1. Property tax

The property tax is an annual local tax owed by every property owner, whether the property is rented or not.

• It is calculated based on the cadastral rental value of the property, reduced by a flat-rate deduction of 50%.
• The tax rate is set by local authorities (municipality, department).

Good to know: some new or renovated dwellings may benefit from a temporary exemption.

2. Housing tax (second homes)

While housing tax is being gradually eliminated for primary residences, it remains applicable for:

• Second homes
• Vacant properties in certain areas

It is also calculated based on the rental value of the property and can be increased in high-demand areas.

3. Income tax related to rental income

If you rent out your property, the rental income is taxable. Two systems exist:

• Unfurnished rental: property income (micro-foncier or actual regime)
• Furnished rental: BIC (micro-BIC or actual regime)

The actual regime allows deducting expenses (loan interest, works, insurance…) and depreciating the property if you rent it furnished.

4. Social security contributions

Rental income (excluding exemptions) is also subject to social security contributions of 17.2%. These contributions apply to taxable profits (or gross income in some cases).

5. Capital gains tax on real estate

When reselling a property, the realized capital gain is subject to tax (except for primary residences):

• 19% tax + 17.2% social security contributions
• Progressive deductions based on the duration of ownership:
• Tax exemption after 22 years
• Total exemption (tax + social security contributions) after 30 years

Specific exemption cases exist (sale of property after moving to a retirement home, reinvestment, etc.).

6. Real estate wealth tax (IFI)

If the net value of your real estate assets exceeds 1.3 million euros, you are subject to the IFI. It applies to:

• Real estate not used for professional activities
• Primary residence (with a 30% deduction)

The IFI is calculated on a progressive basis ranging from 0.5% to 1.5%.

Domacap helps you manage your taxes

A good asset strategy involves mastering property-related taxes. Domacap assists you in:

• Optimizing your tax regimes
• Reducing your taxes through legal mechanisms
• Structuring your assets to make them more efficient

Investing smartly also means managing your taxes effectively.

Conclusion

In real estate, taxes are numerous but can be anticipated, optimized, or even reduced. From property tax to capital gains, including IFI or rental taxation, each situation deserves a tailored analysis. Domacap is here to guide you in a clear, secure, and efficient approach.