French Capital Gains Tax on Real Estate: Taxation of Secondary or Holiday Homes in France

Owning a secondary or holiday home in France is an aspiration for many, but understanding the tax implications—particularly the French capital gains tax on real estate—is crucial. Whether your dream property is by the sea, in the mountains, or nestled in a charming village, it is essential to consider all financial aspects before making a purchase. This guide provides clarity on the taxation of secondary homes in France and offers insights on how to navigate these complexities with the help of specialized services such as ESCEC International.

Buying Property in France: Easier Than You Think

Secondary or holiday homes in France are often used for short stays, whether for a weekend getaway or a few weeks of vacation. For some, these properties also serve as rental investments. However, buying a property in France involves understanding specific regulations and tax obligations.

For a seamless buying experience, ESCEC International provides comprehensive assistance to foreign buyers, offering guidance on property laws, tax planning, and administrative procedures. Their expertise ensures that clients make informed decisions while mitigating potential pitfalls.

Taxation of Secondary Homes in France

Secondary homes are subject to multiple taxes, including property tax and housing tax, even if the property is not occupied year-round. Let’s explore these obligations in detail:

Property Tax and Housing Tax

Owners of secondary homes are required to pay both property tax (“taxe foncière”) and housing tax (“taxe d’habitation”). Unlike principal residences, secondary homes are not eligible for housing tax exemptions or reductions. The housing tax, typically due in November or December, is based on the rental value of the property.

In tourist-heavy regions like Provence or the Côte d’Azur, housing tax rates are often higher. Additionally, since 2015, properties in “tense areas” (regions with a declining rental market) have faced a 20% surcharge on housing tax. Paris, for example, increased the housing tax on second homes by 60% in 2017 to address housing shortages.

Additional Costs

• TV License Fee: Not applicable to secondary homes, as it is only levied on principal residences.
• Tax Credits: Owners of secondary homes are not eligible for tax credits related to energy-efficient renovations or other home improvements.
• Wealth Tax (IFI): Secondary homes do not qualify for a 20% discount in property valuation for wealth tax calculations.
• No Assistance: Unlike principal residences, secondary homes do not benefit from government assistance such as zero-interest loans or tax reduction schemes like the Pinel law.