Paying property tax in France? Here’s your 2017-2018 guide.

16.01.18
12 minute read
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A place to live in France is a common dream, and for good reason: this beautiful, hospitable country is a wonderful place to make a home. There are taxes, though.

Whether you’re an expat living in France or you’re buying property there from abroad, you’ll need to get up to speed on the ins and outs of French property taxes. Here’s a look at how they work.

What’s property tax in France?

Property tax refers to any tax concerning real estate. Broadly put, there are 2 main categories of French property taxes:

  1. sales taxes
  2. maintenance taxes

Sales taxes are the ones you encounter when buying or selling property. Maintenance taxes are paid regularly on property that you already own or rent.

In France, many of the costs associated with property sales are folded into one big fee, which encompasses both taxes and other fees.

However, French property maintenance taxes break down a bit further into 2 types:

  1. property ownership
  2. residence

There are a few differences for residents and non-residents, but the bulk of the costs are the same for both.

(Sales: Source 1 Source 2 // Maintenance: Source 1 Source 2 08 December 2017)

Who has to pay property tax in France?

When a property changes hands in France, the convention is that the buyer pays the main fee (*frais de notaire* - more on that one shortly). But there will likely be seller’s fees too.

Of the 2 maintenance taxes, one is always the property owner’s responsibility; the other always the occupant’s, unless they are only renting on a short-term basis, in which case the owner pays.

Some taxes have full or partial exemptions, which are explained further below.

(Notaire fees: Source 1 Source 2 // Maintenance: Source 1 Source 2 08 December 2017)

What kinds of sales taxes are there in France when I buy or sell property?

There are different taxes to pay whether you’re buying or selling a property in France. They are property taxes, and are specifically called sales tax. This section will break those various costs down depending on which side of the transaction you’re on.

Sales tax when buying a French property

The good news is that an official known as a notaire will do the legwork in putting together your bill, so rather than a lot of different pieces of paperwork, you’ll just have 1 fee to deal with. The bad news, of course, is that that 1 fee does contain a lot of different costs.

This 1 big bill is called the frais de notaire, or notary’s fee. It includes a variety of fees and taxes to be paid by the buyer. The notaire him/herself doesn’t actually keep it - most of it goes to the state - but it’s gained its confusing name because the notaire is the one who collects it.

The notaire’s fee is made up of a variety of elements:

  • The actual fee to the notaire
  • Stamp duty
  • VAT (only on certain purchases - see below)
  • Additional costs such as land registration, and a sales commission to the notaire, if you haven’t used an estate agent

That’s far from a definitive list of all costs associated with buying or selling a property: they’re just the key ones that go into the notaire’s fee. If you’ve used an estate agent, they'll take a substantial commission too. And there are plenty of other possible fees as well.

(Source 1 Source 2 09 Dec 2017 - these sources also for the below)

The notaire’s fee

This is the fee that goes to the notaire him/herself. It’s sometimes called the émoluments fee.

  • The amount varies depending on the sale price. It’s currently just under 4% for sale prices up to €6,500, and in the region of between 1.6% and 0.8% for prices above that.
  • This fee isn't in fact a tax - although you do have to pay VAT (*TVA* in French) on it, at 20%.

Note that if you don’t use an estate agent, the notaire may also take a sales commission, which is separate to this.

Stamp duty

Stamp duty is a tax on buying a house. In French it’s known as droits de mutation or taxes de publicité foncière. The rate of stamp duty varies slightly between the departments of France, and significantly depending on the age of the property.

  • For properties more than 5 years old, stamp duty is 5.8%, or 5.09% in some departments.
  • For properties less than 5 years old, stamp duty is 0.7% plus VAT at 20%.
  • ‘Off-plan’ properties (in French, Vente en l’état futur d’achèvement or VEFA)

Be sure to check if the price advertised for a property is TTC or not: this stands for Toutes taxes comprises (all taxes included). If the price isn’t TTC, you’ll need to add stamp duty on to the asking price to get a better picture of the cost.

VAT

As noted above, TVA is paid on new or off-plan properties but not on older properties. There is also TVA to pay on the émoluments fee that goes to the notaire.

Additional fees

Part of the notaire’s job is folding all these fees and taxes together for you. The total frais de notaire bill you’ll receive will likely be greater than just the above; it may also include fees such as:

  • Land registry
  • Mortgage arrangement
  • Property security.

The official website of the notaires has a fee calculator where you can get a broad estimate of the total fee and how it’s broken down.

Sales tax when selling a French property

While the buyer shoulders a lot of the burden of the fees, selling a property in France has its costs as well:

  • You might have to pay a property agent.
  • You might have to supply technical reports if the property is at risk from, for example, termites or dry rot.
  • You might have to pay capital gains tax (*plus values*)

Plus values

This tax, known as capital gains tax in English, is charged on the difference between the purchase price and the selling price. There are various exemptions (see the section below).

  • The rate is currently 34.5% of the difference between buying and selling price. That’s technically comprised of 19% income tax and 15.5% social levies.
  • Non-EU residents used to be charged a different rate but this is no longer the case since 2015.
  • On gains greater than €50,000, a supplementary tax is charged on top of the above, rising from 2% to 6% for extremely large gains.

(Source 1 Source 2 09 December 2017)

Summary: property sales taxes

New property (less than 5 years old) Older property Buyer Seller Cost
Notaire fee 0.814% - 3.945% depending on property price, plus VAT
Stamp Duty 5.8% or 5.09% for older properties, 0.7% plus VAT for newer properties
Additional frais de notaire fees Variable. Includes land registry fee, approx. 0.1%
VAT Paid on stamp duty for new or off-plan properties, and on notaire fee. 20%
Agent fees Varies - may be between 5% and 10%. If an agent isn’t used, a notaire commission is charged instead
Capital Gains 34.5% of profit, plus additional 2%-6% for very high gains

(sources all as above)

What should I know about paying maintenance tax in France for a property I already own?

Once you own a property, you do still have taxes to pay. These are what are called maintenance taxes. There are 2 main taxes that you have to pay each year in France when you own a property:

  • Taxe foncière (land tax)
    Taxe d’habitation* (habitation tax)

Here’s a look at both of them.

Taxe foncière (land tax)

Taxe foncière must be paid by the owner of the property, whether or not they live there. You’ll receive a letter about paying this tax in the final quarter of the year. There’s a range of repayment options and you can pay in monthly instalments if you set it up.

  • The amount is a percentage based on the notional rental value of the property, less 50% for running costs.
  • Note that the person who has to pay this tax is the person who owns the property on 1st January of the year in question, so if you move in later in the year, the bill isn’t technically yours. However, it’s common to share these costs between buyer and seller in a proportionate way, and this is something that should be dealt with in a contract.

(Source 1 Source 2 Source 3 08 December 2017)

Taxe d’habitation (habitation tax)

In contrast to the taxe foncière, the taxe d’habitation is paid by the occupant rather than the owner. Like with the taxe foncière, you’ll receive a letter about this tax towards the end of the year, and you can sort out your payment method then.

  • Again, the person who has to pay is the occupant on 1st January that year.
  • You don’t have to be physically there on 1st January, though: the key thing is whether you have the right of occupation. So, if it’s your second home and you’re not there for most of the year, you still have to pay. If the property is let out, the tenant pays this tax.
  • The amount is again calculated based on a notional rental value. Local tax authorities have a say in this as well, so it can vary substantially from place to place.
  • Highly rated homes and second homes have an extra levy, called a prélèvement pour base élevée et sur les maison secondaires. This is a small extra percentage figure, on top of the normal tax.

(Source 1 Source 2 08 December 2017)

Other ongoing taxes

Those are the only 2 taxes you have to pay as a direct result of maintaining property in France. However, being a property owner in France means that you’ll have to file French tax returns and may have to pay the following:

  • Income tax
  • Wealth tax
Income tax

You’ll probably have to pay the French impôt sur le revenu if you’re ‘fiscally resident’ in France. So even if you don’t actually live there, if you make money from letting out a property, that income is still taxable in France.

If you don’t live in France, it’s important to know whether or not your country has a double taxation treaty with France: these treaties insure that you don’t pay tax on the same income to 2 countries.

The basic rate for tax on rental income is 20%, but lower rates are possible depending on your total worldwide income. Watch out as well for a 15.5% tax for social charges on this income.

Complex rules govern how much of your rental income is taxable: it depends on whether the property is furnished or not, as well as your total yearly rental income. As one example, if your gross rental income is less than €23,900 and your properties are furnished, you’ll have to pay income tax on 50%.

(Source 1 Source 2 11 December 2017)

Wealth tax

The hotly debated* impôt de solidarité sur la fortune* currently applies to those who have a net wealth of more than €800,000. If you’re a non-resident, only your French assets are considered. If you’re a foreigner who has newly become an expatriate in France, for the first 5 years you only have to pay based on the value of your French assets, not your worldwide assets.

Wealth tax is currently charged at between 0.5% and 1.5% depending on the extent of your wealth.

70% of the market value of your property counts towards your assets.

An important caveat: changes to wealth tax are afoot. Check what the very latest state of play is before getting your checkbook out - or putting it away.

(Source 1a Source 1b Source 2 11 December 2017)

Summary: property maintenance taxes

Resident in France Non-resident in France Property occupant Property owner Cost
Taxe foncière Variable depending on region and function of home (second homes cost more)
Taxe d’habitation Variable depending on region and function of home (second homes cost more)
Income tax If the property is being rented out Variable depending on total income and nature of rental income
Wealth tax If net wealth (including 70% of property value) exceeds €800,000 Currently 0.5%-1.5% of total assets

(Sources as above)

Are there any property tax deductions I can claim in France for 2017-2018?

Frais de notaire déductions/exemptions

You shouldn’t have to pay VAT on stamp duty for older properties.

Plus values deductions/exemptions

You don’t have to pay capital gains tax in France if the property is your main residence when it’s sold.

  • You also don’t have to pay if it sells for less than €15,000.
  • And you’re also not eligible if it’s the first time the property has been sold and you’re currently renting accommodation elsewhere - so long as you then use the money gained to buy a (different) house.

Taxe foncière déductions/exemptions

You don’t have to pay taxe foncière on buildings less than 2 years old, if they’ve been properly declared. And you can claim relief on this tax in the following cases:

  • For buildings that go beyond current energy efficiency standards (in certain regions only).
  • If you’re having difficulty letting the property despite trying, or if you’re renovating it such that you can’t let it out at all.
  • If you’re over 65, registered disabled or on certain benefits - consult French-property.com for more information on tax relief.

(Source 1 Source 2 08 December 2017)

Taxe d’habitation deductions/exemptions

You don’t have to pay this if the property is uninhabitable.

  • Various categories of people are exempt, such as those over 60, subject to a means test.
  • And for those on a lower income, lower rates are available.

(Source 1 Source 2 08 December 2017)

When do I pay my property taxes in France?

For sales costs, consult the notaire for a schedule: they are in charge of billing and collecting the fees.

You receive bills for taxe foncière and taxe d’habitation towards the end of the year; either pay the total promptly or set up a schedule of recurring payments.

  • Income tax returns are due at different dates depending on payment method and region: it’s generally in May of the following year.
  • Wealth tax can be done as part of your tax return, unless your assets total more than €2.57m or you don’t pay French income tax - in which case you need to file a declaration separately.

How do I pay my property taxes in France?

Sales fees

Check with the notaire for sales costs and how to pay. They redistribute the total fees themselves, including paying the government.

Property tax calculator

For sales costs, take a look at the fee calculator on the official website for French notaires, to get a rough idea of costs.

Other taxes

There are a variety of ways to pay most other property taxes as well as the other taxes involved. You’ll receive a bill for both taxe foncière and taxe d’habitation, which will detail payment options. Online is often a good option.

Paying property taxes online

To pay taxes online, make your way to the official government website. It will take you through the process step by step.

If you’re making a payment to the French government - or a French notaire - you should make sure you don’t pay the banks or money transfer services more than you have to. The last thing you need is an extra cost on top of your taxes. TransferWise could help if you manage your finances internationally.

Banks and traditional money services often mark up the exchange rate heavily - frequently by 4-5% - and there may well be fixed fees on top of that too. But TransferWise uses the real, mid-market exchange rate - the only one that’s fair - and only charges one small fee, stated clearly upfront.

So whether you already have a French bank account or you just need to get more money into the country, TransferWise can probably save you money.

And with a borderless multi-currency account, you can even hold money in euros for as long as you want, and get virtual local account details so that you can send and receive payments with ease in the US, the UK, the EU and Australia. Borderless accounts allow you to hold money in up to 28 different currencies, so you can switch between currencies whenever you want.

Take a look at how much you could save by using TransferWise rather than a bank transfer.

Taxes are always a headache, especially when property is involved. Good luck in navigating the French system - and in handling your money internationally without losing out.

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