Tax in France and tax on properties in France
Tax is always a confusing and unwelcome topic which can add greatly to the cost of properties. France is no different to other countries in that respect. With this in mind you must familiarise yourself with the system of tax in France before you start looking at homes in France.
Registering homes in France for tax
After the contracts have been signed, and the taxes and other costs associated with buying properties in France have been paid, the notaire will stamp and register the title deed. The process of registering homes in France with the Land Registry will take about six months.
Tax in France on properties. France´s property taxes
Aside from the those paid during the buying process there are two main types of property tax in France which individuals must pay. Occupiers of properties in France must pay taxe d´habitation which is due on January 1 and is based on the rental value of a property.
Taxe fonciere is a land tax, also payable on January 1 each year. The owner of the land must pay this tax in France, whether the land is built upon or not. This is also levied according to the rental value of properties. France´s laws allow exemptions to both these taxes for retired persons.
Capital gains tax in France
From January 2004, homes in France owned for 15 years or more are exempt from capital gains tax. Otherwise, after five years of ownership, the net gain is reduced by 10% for each subsequent year of ownership.
Residents pay capital gains tax at a flat rate of 16% plus 11% social charges on non-residential transactions. Non-residents pay 16%, or 50% if it is deemed a trading transaction. If it is your home and you are a French tax resident then the gains are tax-free.
Inheritance tax in France
Inheritance tax in France is an issue for anyone considering buying French properties. France has a quite unique system of inheritance tax, which is payable on any properties owned by non-residents. Legislation introduced last year means estates up to €100,000 are free from inheritance tax in France. However, inheritance tax in France still causes a great deal of anxiety.
Other taxes relating to homes in France
Income tax must be paid on your total worldwide income and this includes revenue generated from renting out homes in France. A separate landlord tax in France, contribution sur les revenues locatifs, is levied on rental income.
People with net assets in France of more than €732,000 are also liable to wealth tax in France.
Whenever buying properties in France you must keep in mind that tax adds to the cost of homes in France. Specialist tax advisors can help minimise your liability to tax in France.
