Property Tax in France: Your 2025 Guide to Understanding and Managing French Real Estate Taxes

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Investing in real estate in France is an attractive opportunity, but it’s essential to understand the various taxes involved to protect your investment and ensure compliance. Whether you’re purchasing a property, renting it out, or simply owning real estate, understanding property tax in France is crucial. This guide outlines the key taxes you need to be aware of before making any real estate investment in France.

Property Acquisition Costs (Notary Fees)

One of the first expenses you’ll encounter when buying property in France is the property acquisition cost, commonly known as “notary fees.” These costs can vary depending on whether the property is old or new.

  • For older properties: Acquisition costs typically range between 7% and 8% of the purchase price. Registration fees, which are a significant part of this cost, represent around 5.80% of the total.
  • For new properties or off-plan purchases (VEFA): The acquisition costs are generally lower, around 2-3% of the purchase price, plus a 20% VAT. Registration fees for these properties are approximately 0.7% of the purchase price.

It’s important to note that actual notary fees only account for about 1% of the total cost, with the majority going towards registration fees and related expenses.

Tax on Rental Income in France

If you earn rental income from a property in France, even as a non-resident, you are required to declare this income and file a tax return. The taxation of rental income in France depends on whether the property is rented out as a bare rental or a furnished rental:

  • Bare rentals are classified as “revenus fonciers” (rental income).
  • Furnished rentals are classified as “Bénéfices Industriels et Commerciaux” (commercial income).

Non-residents are subject to a minimum tax rate of 20% on their rental income, plus social charges (CSG CRDS) at a rate of 17.2% (or 7.5% for those affiliated with the social security system of another EU member state, Switzerland, or the UK).

Local Property Taxes in France: Housing Tax and Property Tax

Owning property in France means you’ll be liable for two key local taxes: the housing tax (Taxe d’Habitation) and the property tax (Taxe Foncière).

  • Housing Tax (Taxe d’Habitation): This tax applies primarily to second homes and is payable by the property owner or occupant as of January 1st of the tax year. The amount is calculated by multiplying the cadastral rental value of the property by the local tax rates.
  • Property Tax (Taxe Foncière): This annual tax is due from the property owner, whether or not they occupy the property. The tax base is the cadastral rental value. If you purchase a property during the year, the seller is typically responsible for paying the property tax for that year, though it’s common to negotiate a sharing arrangement.

Real Estate Wealth Tax (IFI) in France

The Impôt sur la Fortune Immobilière (IFI) is a wealth tax that applies to real estate assets in France. For non-residents, only real estate located in France is subject to this tax, in accordance with international tax treaties.

Taxable assets include:

  • Main residences, second homes, land, and rental properties.
  • Shares in non-trading property companies (SCI).
  • Units in real estate investment funds (SCPI).
  • Shares in companies where you hold at least 10% of the share capital, up to the value of their real estate assets.

If the net value of your real estate assets in France exceeds €1.3 million, you are required to pay the IFI. The tax is calculated on a progressive scale from 0.5% to 1.5%. Remember, the IFI is self-assessed, so it’s your responsibility to declare your assets annually. Failure to do so can result in penalties and the recovery of unpaid taxes for up to six years.

Mastering Property Tax in France

Understanding property tax in France is essential for anyone involved in real estate, whether you’re a local property owner or an international investor. By being aware of the various taxes—acquisition costs, rental income tax, local taxes, and the real estate wealth tax—you can make informed decisions and optimize your investment.

At ESCEC International, our Paris-based accounting firm specializes in helping clients navigate the complexities of property tax in France. We provide expert guidance to ensure compliance and optimize your tax situation, whether you’re investing locally or internationally. Contact us today to learn how we can support your French real estate investments.