What is the amount of real estate capital gains tax?

Résumé

The standard tax rate on real estate capital gains is 36.2% (19% income tax + 17.2% social contributions).
In practice, sellers often pay less thanks to several relief mechanisms.
The longer the property is held, the lower the tax. Income tax is fully exempt after 22 years of ownership. Social contributions are fully exempt after 30 years.
The main residence is fully exempt, regardless of holding period. Tax applies only to second homes, rental properties, and land.

The overall tax rate on real estate capital gains is 36.2%: 19% income tax and 17.2% social contributions. In practice, sellers often pay less. First, because the tax authorities apply abatements that progressively reduce the taxable gain over the holding period. Second, because the purchase price can be “uplifted” by standard allowances covering acquisition costs and renovation works, which further reduces the taxable capital gain.

How Is Capital Gains Tax Structured?

Taxation is split into two separate components. Both are cumulative, resulting in a gross rate of 36.2% before any allowances are applied:

The first component is income tax, applied at a flat rate of 19%. This rate is fixed and does not depend on the seller’s other income.
The second component consists of social contributions, applied at a rate of 17.2%.

The tax is calculated and withheld by the notary on the day of the sale. The seller is not required to file a declaration, but it is strongly advisable to review the capital gains calculation in advance, including applied allowances and deductions, as any error may result in overpayment.

Do Transaction Costs Affect Capital Gains Calculation?

Yes, significantly. Before applying the tax, the acquisition price can be increased by adding two standard allowances.

The first allowance covers acquisition costs (notary fees, agency fees): +7.5% of the purchase price, without requiring supporting documentation.

The second allowance covers renovation work carried out on the property: +15% of the purchase price, provided the property has been owned for more than 5 years, also without documentation.

Combined, these two allowances increase the acquisition price by +22.5%. Mechanically, this reduces the gross taxable capital gain.

How Do Holding-Period Allowances Reduce Taxation?

Allowances apply starting from the 6th year of ownership. From that point, the taxable capital gain decreases progressively, following two separate schedules for income tax and social contributions.

For income tax: 6% allowance per year from year 6 to year 21, then 4% in year 22. In other words, there is full exemption from income tax after 22 years.
For social contributions: 1.65% per year from year 6 to year 21, 1.60% in year 22, then 9% per year from year 23 to year 30. In other words, there is full exemption from social contributions after 30 years.

A full guide detailing legal rules and examples is available on how real estate capital gains tax is calculated.

Numerical Example

A property purchased for €400,000 is resold for €600,000 after 15 years of ownership.

Applying the +22.5% adjustment, the acquisition price becomes €490,000, reducing the gross capital gain from €200,000 to €110,000. After 15 years (10 years of allowances):

Income tax allowance reaches 60%, reducing taxable gain for income tax purposes to €44,000 (⇒ Tax due: €8,360).
Social contribution allowance reaches 16.5%, reducing taxable gain to €91,850 (⇒ Contributions due: €15,800).

Total tax amounts to approximately €24,160 (income tax + social contributions), representing an effective rate of around 22%, significantly below the gross 36.2% rate.

How Does the Additional Tax on Gains Above €50,000 Work?

When the net taxable capital gain exceeds €50,000 after allowances, an additional surtax applies. It is progressive, ranging from 2% to 6% depending on the gain amount.

For example, a taxable gain of €100,000 triggers an additional tax of approximately €4,000, which is added on top of the base tax.

In high-value markets, particularly in Western Paris, this component must be included in the calculation of the “net seller proceeds”, i.e. the final amount received after taxation.

What Are the Exemption Cases?

Several situations allow full exemption from capital gains tax.

Main Residence (Common Case)

The sale of a primary residence is fully exempt from capital gains tax, regardless of ownership duration. This exemption also applies to related assets sold simultaneously (garage, cellar).

Long-Term Ownership

Full exemption from income tax applies after 22 years, followed by full exemption from social contributions after 30 years.

Sale of a Non-Primary Residence Asset

This less-known exemption applies to the first disposal of a property other than the main residence. The capital gain is exempt if:

The seller has not owned their main residence during the four years preceding the sale,
And the proceeds are reinvested in the purchase of a main residence within 24 months.

Two strict conditions apply:

The exemption is proportional to the portion of proceeds actually reinvested (partial reinvestment results in proportional taxation),
This option must be explicitly stated in the initial sale deed before the notary.

For a full overview, see the guide on capital gains tax exemptions. Specific rules for second-home capital gains are also detailed there.