What is real estate capital gain for non-French residents?
Whether you're a non-resident, an expat, or you moved abroad, when you own real estate in France, you're still taxed on your real estate capital gain.
The real estate capital gain is the difference between the price you bought the property for and the final price of when you sold said property to a new owner.
How is a capital gain calculated and taxed for a non-resident?
Your real estate capital gain is subject to an income tax rate of 19%, regardless of your official country of residence. This is also subject to social security contributions that amount to a rate of 17.2%.
Since the taxation of property income received in 2018 and real estate capital gains earned since January 1, 2019, those under a compulsory social security scheme–other than French—who reside in either an EEA country (European Union, Iceland, Norway, Liechtenstein) or in Switzerland are exempt from generalized social contribution (CSG) and contribution to the repayment of social debt (CRDS).
Also worth noting is that, as of this writing, British residents continue to also benefit from these exemptions despite their exit from the EU.
Who can be a tax representative?
- The buyer of the property if they are tax residents of France.
- Banks and credit institutions operating in France.
- Any person accredited by the administration.
As for residents, the tax is levied by the notary at the time of sale. The capital gain should therefore not be reported on the 2042 return.
What exemption can you benefit from?
- In the case of transfer of your principal residence in France
To benefit from this right your new residence must be located in the European Union or in a state that has entered into an administrative assistance agreement (in order to fight against fraud and tax evasion) and a tax recovery agreement with France. This should also be registered at the time of the property transfer.
To do this, certain conditions must be met:
- The transfer must be made no later than December 31st of the year following the transfer of the seller's tax residence outside of France.
- The non-resident owner/seller was free to dispose of their former principal residence in France following their departure from the country.
- The principal residence was not made available to a third party outside the seller and buyer.
It's also important to note:
- The deed of assignment must indicate the exemption and its basis.
- The non-resident owner/seller cannot benefit from the exemption below (provided for in Article 150 U II 2 ° of The CGI) if they already benefitted from previous exemptions.
- Your Net Taxable Capital Gain amounts to €150,000.00
Like the previous exemption, this one also applies when the owner/seller transfers their residence to anywhere within the European Union or in a state that has entered into an administrative assistance agreement (in order to fight against fraud and tax evasion) with France.
At the same time, two conditions must be met:
- The owner/seller must have been a tax resident in France for at least two years at any time prior to the sale of the property.
- The transfer must take place no later than December 31st of the tenth year following the move of said owner/seller—specifically their tax residence—outside of France (December 31st of the fifth year for transfers made before January 1st, 2019).
- The seller sold their property before January 1st of the year prior to their move outside of France.
Also note that:
- Civil servants, local authority employees, and healthcare civil servants who work abroad but who are tax residents in France may benefit from this exemption.
- The exemption applies within the limit of one residence per taxpayer.
- Cohabiting partners each constitute a single transferor and are subject to separate taxation for real estate capital gains.
- In the case of property sold by mutual agreement by a married couple, the spouses are considered co-transferors.
What are the grounds for exemption from declaring capital gains?
- The final price of the sold property is equal to or less than €15,000.00.
- Disposals benefiting from an exemption from capital gains taking into account allowances (holding period).
- The real estate capital gains tax is imposed at a rate of 19%, regardless of the seller's country of residence.
- This will also be subject to social security contributions of 17.2%.
- British residents continue to benefit from these exemptions despite their exit from the European Union.
- In case of transfer of your main residence established in France, the new residence must be located in the European Union or in a state that has entered into an administrative assistance agreement (to fight against fraud and tax evasion) and a tax recovery agreement with France.
- It is also possible to benefit from an exemption of up to €150,000.00 if you do not already benefit from the previous exemptions.
- Civil servants, local authority employees, and healthcare civil servants who work abroad but remain tax residents in France can benefit from the exemption.
- If you sold your property for €150,000.00 or less, you can also benefit from the exemption.
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Posted on 30/11/2022 by
Andy LECUYER
