Capital Gains Tax on Property Sales in 2024: A Comprehensive Guide

Selling a property can generate a capital gain, which is subject to taxation in France. In 2024, tax regulations are evolving, and it is essential to understand the applicable rates, possible exemptions, and calculation methods to avoid unexpected liabilities. Whether you own a residential property, land, or shares in property companies, this guide explains everything you need to know about capital gains tax on property sales in 2024, with practical examples and advice.

What is a Capital Gain on Property?

A capital gain on property is the difference between the sale price of a property and its acquisition price (or its declared value in the case of a gift or inheritance). For example, if you purchased a flat for €200,000 in 2015 and sell it for €300,000 in 2024, the gross capital gain is €100,000. However, this amount is not fully taxable: deductions for the length of ownership and deductible expenses can significantly reduce the taxable amount.

Capital Gains Tax Rates on Property in 2024

Basic Rates and Social Charges

In 2024, capital gains on property are subject to two types of levies:

1. Income Tax (IR): A flat rate of 19% applies to the net taxable capital gain (after deductions).
2. Social Charges: A rate of 17.2% is added, bringing the total rate to 36.2% for French tax residents.

These rates are set by Article 244 bis A of the French General Tax Code, which also specifies the rules applicable to non-residents.

Special Cases: Non-Residents and Companies

• Non-Residents: Individuals or legal entities not domiciled in France are subject to the same 19% income tax rate, but social charges may vary depending on their country of residence and international tax treaties.
• Companies: Companies subject to corporation tax (IS) have their capital gains on property taxed at the standard 25% rate (the standard IS rate in 2024), with a possible deduction for the length of ownership (see below).

Deductions for Length of Ownership

One of the main ways to reduce capital gains tax on property is through deductions for the length of ownership. The longer you hold a property, the less the capital gain is taxable. Here are the rules applicable in 2024:

For Individuals

• Deduction for Income Tax (IR):

• 6% per year from the 6th year of ownership.

• Full exemption after 22 years of ownership.

• Deduction for Social Charges:

• 1.65% per year from the 6th year.

• 1.60% for the 22nd year.

• Full exemption after 30 years of ownership.

Example: If you sell a property after 15 years of ownership, the deduction for income tax will be 60% (6% × 10 years), and the deduction for social charges will be 16.5% (1.65% × 10 years).

For Companies Subject to Corporation Tax (IS)

Companies benefit from a specific deduction: 2% per full year of ownership for built properties, as specified in Article 244 bis A of the French General Tax Code. This means that after 50 years of ownership, the capital gain is fully exempt from corporation tax.

Possible Exemptions in 2024

Certain situations allow for full or partial exemption from capital gains tax on property. Here are the main exemptions:

1. Sale of the Principal Residence

The sale of your principal residence is fully exempt from capital gains tax, with no condition on the length of ownership. This exemption also applies to immediate dependencies (garage, cellar, etc.), provided they are sold at the same time as the property.

2. First Sale of a Property Other Than the Principal Residence

If you sell a property that is not your principal residence for the first time, you may benefit from a partial or full exemption under the following conditions:

• You must not have owned your principal residence in the 4 years preceding the sale.
• You must reinvest the proceeds from the sale in the purchase of your principal residence within 24 months.
• The exemption is full if the capital gain does not exceed €50,000 for a single person or €100,000 for a couple.

3. Sale of a Property Held for More Than 30 Years

As mentioned earlier, social charges are fully exempt after 30 years of ownership, and income tax after 22 years.

4. Sale of a Property for Less Than €15,000

Capital gains realised on the sale of a property with a price below €15,000 are exempt from tax. This exemption applies per property, not per taxpayer.

5. Exemptions Linked to the Seller’s Situation

Certain personal situations entitle the seller to exemptions, including:

• Elderly or Disabled Persons: Full exemption if the seller is over 70 years old or disabled, and their income does not exceed certain thresholds.
• Expatriates: Exemption under conditions for French nationals leaving France to settle in an EU or European Economic Area (EEA) country.

Calculating the Taxable Capital Gain

To determine the amount of the taxable capital gain, follow these steps:

1. Determine the Sale Price

The sale price corresponds to the property’s selling price, less the expenses borne by the seller (estate agent fees, mandatory surveys, etc.).

2. Determine the Acquisition Price

The acquisition price is the amount paid to purchase the property, increased by the following expenses:

• Acquisition costs (notary fees, registration duties, etc.), either their actual amount or a flat rate of 7.5% of the purchase price.
• Construction, reconstruction, extension, or improvement expenses (subject to proof).
• Road, network, and distribution costs (for building land).

3. Apply Deductions for Length of Ownership

As explained earlier, deductions apply based on the length of ownership of the property. These deductions reduce the gross capital gain to obtain the net taxable capital gain.

4. Calculate the Tax and Social Charges

Once the net capital gain is determined, apply the tax rates:

• 19% for income tax.
• 17.2% for social charges.

Example: You sell a flat purchased for €250,000 in 2010 for €400,000 in 2024. The acquisition costs (7.5% flat rate) amount to €18,750. The gross capital gain is:

€400,000 - (€250,000 + €18,750) = €131,250.

With 14 years of ownership (2010 to 2024), the deduction for income tax is 54% (6% × 9 years), and the deduction for social charges is 14.85% (1.65% × 9 years). The net taxable capital gain is therefore:

• For income tax: €131,250 × (1 - 0.54) = €60,375.
• For social charges: €131,250 × (1 - 0.1485) = €111,750.

The tax due will be:

• Income Tax: €60,375 × 19% = €11,471.
• Social Charges: €111,750 × 17.2% = €19,221.

For a total of €30,692.

Optimising Your Property Tax Liability in 2024

Here are some strategies to reduce your capital gains tax on property:

1. Wait for Exemption Periods

If you are close to 22 years (for income tax) or 30 years (for social charges) of ownership, it may be wise to wait before selling to benefit from a full exemption.

2. Reinvest in Your Principal Residence

As mentioned earlier, the sale of a property other than your principal residence may be exempt if you reinvest the proceeds in the purchase of your principal residence within 24 months.

3. Undertake Deductible Works

Construction, reconstruction, extension, or improvement expenses can be added to the acquisition price, thereby reducing the taxable capital gain. Keep all supporting documents (invoices, contracts, etc.).

4. Sell in Stages

If you own multiple properties, you can spread sales over several years to avoid exceeding exemption thresholds (e.g., €15,000 per property).

5. Gift Before Selling

Frequently Asked Questions

What is the capital gains tax rate on property in 2024?

In 2024, the capital gains tax rate on property is 19% for income tax and 17.2% for social charges, resulting in a total rate of 36.2% for French tax residents.

How is the deduction for length of ownership calculated?

The deduction for length of ownership is 6% per year from the 6th year for income tax (full exemption after 22 years), and 1.65% per year from the 6th year for social charges (full exemption after 30 years).

What exemptions are available for capital gains on property?

The main exemptions include:

• The sale of the principal residence.
• The first sale of a property other than the principal residence (subject to conditions).
• The sale of a property held for more than 22 years (for income tax) or 30 years (for social charges).
• The sale of a property for less than €15,000.

Can notary fees be deducted from the acquisition price?

Yes, notary fees and registration duties can be deducted from the acquisition price, either for their actual amount or via a flat rate of 7.5% of the purchase price.

What happens when selling a property received by gift or inheritance?

In the case of a gift or inheritance, the acquisition price corresponds to the declared value at the time of transfer. Gift expenses (transfer duties) can be added to this price to reduce the taxable capital gain.