Real-estate capital gain
The gain made on selling a property, equal to the difference between the sale price and the purchase price increased by acquisition costs and improvement works. The primary residence is fully exempt. For other properties, a progressive allowance applies based on the holding period, leading to full exemption after 22 years for income tax and 30 years for social contributions. The broker factors this into any buy-resell structure.
Key points
- The primary residence is fully exempt from capital gains tax on sale.
- The holding-period allowance leads to full exemption after 22 years (income tax) and 30 years (social levies).
- Acquisition costs and improvement works may be added to the purchase price on a flat-rate or actual basis.
- A capital gain exceeding €50,000 is subject to a progressive surcharge.
Frequently asked questions
How is the taxable capital gain calculated on the sale of a rental property?
The purchase price is increased by acquisition costs (notary fees increased by 7.5% flat rate or actual costs) and improvement works (evidenced or a 15% flat rate after 5 years of ownership). This adjusted amount is subtracted from the net sale price (after agency fees). Holding-period allowances are applied to the resulting gross gain, then the tax rates of 19% (income tax) and 17.2% (social levies) apply.
Why does the broker factor in capital gains tax in a buy-resell project?
In a short-term buy-resell (under 5 years), no allowance applies and the gain is fully taxed. If the transaction shows an attractive gross return but a significant taxable gain arises, the net return may disappoint. The broker includes this tax cost in their feasibility analysis to present the investor with a realistic net return.
Are there exemptions other than the primary residence exemption?
Yes. Key ones include: sale of property valued below €15,000 is exempt; the first sale of a secondary residence is exempt when the seller has not owned their primary residence for at least 4 years and reinvests the proceeds in buying one. Specific exemptions also exist for retirees subject to income conditions.
In practice
An investor sells a rental flat purchased 8 years earlier. Thanks to the holding-period allowances, the taxable gain is reduced by approximately 24% for income tax purposes, meaningfully improving the net return compared with a resale after only 2 years.
Official sources
- Real estate capital gain · Service-Public.gouv.fr
- Will I pay capital gains tax? · impots.gouv.fr
- Housing and financing information · ANIL