Paying taxes on real estate value added

Real estate value represents the increase in value of your property, measured by the difference between the sale price and the purchase price. This sum may be taxed in the State in which the immovable property in question is located. TEVEA International assists the cedants in the tax procedures related to the sale.

Calculation of the capital gain

The gross capital gain is equal to the difference between the sale price of the property and the purchase price of the property.
The purchase price includes:
  • the purchase price itself
  • miscellaneous expenses (notary, registration) which can be stopped at 7.5% of the purchase price in the absence of supporting documents
  • expenditure incurred for rehabilitation, enlargement and various improvements, which represent 15% of the purchase price if you are unable to present the invoices, provided that you have held the property for more than 5 years
  • road and development costs
The selling price includes:
  • the sale price indicated in the notarial deed
  • the indemnities paid to the transferor
The seller may deduct from the sale price the expenses incurred by him during the transaction, including the costs of diagnosis, agency fees and tax representation expenses for non-residents. Of course, they must be justified.

Calculation of taxes

Net real estate value is obtained after application of a deduction for a separate period of detention for tax and social security contributions. Two taxes are to be levied: income tax and social contributions. The IR represents 19% of the net capital gain, and the social contributions 17.2%, which makes a total of 36.2% to be deducted. When the net capital gain exceeds € 50,000, a surtax is required, it amounts to 2%, up to 6% in excess of € 260,000.

It is also possible to benefit from exemptions depending on the nature of the property (principal residence) and the duration of detention. Thus, if you have been owner for more than 30 years, the capital gain is exempt on sale. Similarly, if the sale price is less than 15 000 €, you are exempt. Finally, if you are a non-tax resident and you sell property in France and have been taxed in France for 2 consecutive years at any time prior to the transfer, you can benefit from an exemption up to 150K € of net taxable capital gains.

Tax returns

Taxes on capital gains on property must be duly declared by filling in the form provided for this purpose by the tax authorities. Correct statements should be made to avoid requalifications. For non-residents outside the European Union, it is compulsory to use a tax representative to draw up the declaration of surplus value and to respond to any solicitation by the Tax Administration to ensure during the 3 years of commitment following the year of Cession.

TEVEA International is an accredited tax representative with a long and solid experience in this field. Since 1984, we have been a competent team with the finest details on the tax aspects of real estate sales.