Buying Property in France: What Taxes Will You Have to Pay?

Purchasing real estate in France can be an attractive investment opportunity for international buyers. However, understanding the French tax system is essential before completing your acquisition. Property owners may be subject to several taxes and charges throughout the purchase and ownership process.

Below is an overview of the main taxes and costs that non-resident investors should anticipate when buying property in France.

Property Acquisition Costs (Commonly Known as Notary Fees)

The taxes and fees payable at the time of purchase depend largely on whether the property is new or existing.

Existing Properties

For older properties, acquisition costs generally range between 7.5% and 8.5% of the purchase price. A significant portion of these expenses consists of registration duties and land registration taxes, which typically account for around 5.8% of the property’s value.

New Properties and Off-Plan Purchases (VEFA)

When purchasing a newly built property or an off-plan property, acquisition costs are usually lower, averaging between 2% and 3% of the purchase price. However, buyers must also pay VAT at the standard rate of 20%, which is generally included in the sale price.

Registration duties for new properties are significantly reduced and represent approximately 0.7% of the acquisition value.

Payment of Acquisition Costs

These fees are paid directly to the notary handling the transaction at the time of completion. Although commonly referred to as “notary fees,” the notary’s actual remuneration represents only a small portion—typically around 1% of the total amount. The remainder consists of taxes, registration duties, and administrative expenses.

Tax on Rental Income

Non-residents who receive rental income from French property are required to declare this income in France, regardless of the amount earned. There is no minimum threshold below which a declaration is unnecessary.

The tax treatment depends on the type of rental activity:

• Unfurnished rentals are generally taxed under the French property income regime.
• Furnished rentals are usually taxed under the commercial profits regime.

In principle, non-resident taxpayers are subject to a minimum income tax rate of 20% on French-source rental income.

Additional social contributions may also apply:

• 17.2% for most non-residents.
• 7.5% for individuals affiliated with the social security system of another European Union country, as well as the United Kingdom or Switzerland.

Local Property Taxes

Property owners in France may be liable for two separate local taxes:

Housing Tax (Taxe d’Habitation)

The housing tax generally applies to secondary residences. It may be payable by either the owner or the occupant of the property, depending on the circumstances.

The tax is calculated by the French tax authorities based on the property’s status as of January 1st of the tax year. The amount due is determined using the property’s cadastral rental value and the tax rates established by local authorities.

Property Tax (Taxe Foncière)

The property tax is an annual charge paid by the owner of the property, regardless of whether the property is occupied, rented, or vacant.

As with the housing tax, the taxable base is derived from the property’s cadastral rental value.

When a property is purchased during the year, the seller generally remains liable for the tax for that year. Nevertheless, buyers and sellers often agree to share the cost through a prorated adjustment included in the purchase contract.

French Real Estate Wealth Tax (IFI)

Non-residents are generally subject to the French Real Estate Wealth Tax (Impôt sur la Fortune Immobilière – IFI)only on real estate assets located in France, subject to the provisions of any applicable tax treaty between France and their country of residence.

The IFI is assessed annually based on the value of taxable assets owned on January 1st.

Assets Included in the IFI Tax Base

Taxable assets may include:

• Primary and secondary residences located in France;
• Rental properties;
• Building land and undeveloped land;
• Shares held in French real estate companies (SCI);
• Interests in real estate investment vehicles such as SCPI funds;
• Shares in companies to the extent that they represent French real estate assets, particularly where the taxpayer owns at least 10% of the company’s capital.

Deductible Debts

Certain debts may be deducted when calculating the taxable net value of assets, provided that:

• The debt existed on January 1st of the tax year;
• The taxpayer is personally liable for the debt;
• The debt relates directly to taxable real estate assets.

IFI Threshold and Rates

IFI becomes payable when the net value of French taxable real estate assets exceeds €1.3 million.

The tax is calculated using a progressive scale, with rates ranging from 0.5% to 1.5% depending on the value of the taxable assets.

Filing Requirements

IFI is a self-assessed tax, meaning taxpayers are responsible for determining whether they meet the filing threshold and for submitting the required declaration.

Failure to file can result in tax reassessments, interest, and penalties. In cases where no declaration has been submitted, the French tax authorities may investigate and recover unpaid tax over an extended assessment period.

The IFI return is generally filed alongside the annual French income tax return, typically by the end of May.