French Capital Gains Tax: Calculation

French Capital Gains Tax, French tax representative

Assessment of the capital gains on real estate

The capital gains result in the difference between the cost of the transfer and the acquisition cost, decreased – if the asset has been owned for more than 5 years – by a variable allowance, and decreased again by a fixed allowance.

A - COST OF THE TRANSFER

The cost of the transfer is established by the sale price such as planned in the notarial deed, decreased by :
- Fees paid to an intermediary or to a commission agent (sale fees of the agent ...) ;
- Expenses related to attestations and diagnosis made compulsory by the laws in force on the day of the transfer (termites, asbestoses) ;
- Eviction allowances paid to a tenant by the owner who sells the rented property free of occupation. The same applies for the allowance paid to a tenant by the buyer on behalf of the vendor, which comes as an additional charge to the price ;
- Fees paid to an architect for works allowing to obtain a preliminary agreement to a building permit ;
- Expenses exposed by the vendor of an estate to obtain from a creditor the withdrawal of the mortgage burdening this estate.
This list is restrictive, no other expenses can be deducted from the sale price.

B - THE ACQUISITION COST

The acquisition cost is based on the purchase price paid for an acquisition against payment or on the estimate value for an acquisition without payment.

Furthermore, the acquisition cost can be increased by the following :

1 - Acquisition fees, declaration fees or inheritance and gift duties

More usually called notary fees, these can be added for their real value or for a fixed price equal to 7,5 % of the purchase price or of the estimate value (depending on the case).

2 - Works

It concerns exclusively the expenses of construction, reconstruction, increase or improvement excluding the expenses of maintenance and the expenses which have already been taken into account for the calculation of the income tax (in order to decrease the amount of the tax due).

These works must have been realized by a company in most of the cases. If needed, they will have to be justified by an invoice and a payment.

The properties owned for more than 5 years can benefit from a fixed allowance for works equal to 15 % of the purchase price (instead of the above calculation).

C - ALLOWANCE FOR YEARS OF OWNING

If the property is owned for more than 5 years, it is possible to reduce the capital gains of:
2% for each year between the 6th and 17th
4% for each year between the 18th and 24th
8% for each year between the 25th and 30th

By consequence, a capital gains made on a property owned for more than 30 years, will benefit from an 100% allowance. It will be totaly exempted.

D - FIXED ALLOWANCE

No more available.

E - EXAMPLE

On January 20th 2011, a rented property is sold for €250,000. This property was purchased by Mr and Mrs MARTIN (French tax resident on the day of the sale) on December 12th 1989 for €170,000.

Mr and Mrs MARTIN did not keep the invoices related to the works done on the property.

Within the context of the sale, Mr and Mrs MARTIN have to pay a fee to the real estate agency which settled the sale for an amount of €8,000 and expenses for the establishement of diagnosis for €400.

Here is the assessment of their taxable capital gains :

Cost of the transfer :
Sale price	250,000 €
- Real estate fees	8,000 €
- Expenses for diagnosis	400 €
= Cost of the transfer	241,600 €

Acquisition cost :
Acquisition price	170,000 €
+ Notary fees (fixed 7.5%)	12,750 €
+ Works (fixed 15%)	25,500 €
= Acquisition cost	208,250 €

Capital Gains before the allowances

CG = Cost of the transfer – acquisition cost

CG = 241,600 – 208,250 = 33,350 €

The property has been owned for 21 full years. The years as from the 6th give the right to:
- a 2% for each year between the 6th and 17th, ie an allowance of 24%,
- a 4% for each year between the 18th and 21th, ie an allowance of 16%.

Allowance for years of owning :
40% x 33,350 = 13,340 €

Capital Gains after the allowances :

Basis of the taxable capital gains :

33,350 – 13,340 = 20,010 €

Amount of taxes and social charges to be paid by Mr and Mrs MARTIN on the sale :
Capital Gains Tax : 20,010 x 19% = 3,802 €
Social charges on the capital gains : 20,010 x 13,5% = 2,701 €

That is a total of : 6,503 €

French Capital Gains Tax simulator

Please do not hesitate to use our online tax simulator to know the amount of capital gains tax you may have to pay.

French Capital Gains Tax

Fiscal representative free quote

Quick Links

French Capital Gains Tax (CGT)	Legal information	About us	Real estate professionals
Tax rate	What's New?	Free tax information & documentation	Tax representative offer
Calculate tax	French Tax book	Tax representative mission	Tax representative quotation
French Tax Online	Taxable Capital Gains	Contact us	Partners
	Tax exemptions	Maps & Directions	Links
	Assessment of CGT	Language
	Tax obligation
	Non French resident specifications
	Introduction
	Application
	Tax exemptions
	Assessment of CGT
	Tax rate
	Tax obligation
	Details CGT calculation
	Cost of the transfer
	The acquisition cost
	Allowance for years of owning
	Fixed allowance
	Example
	F.A.Q.
	List of countries and tax rates
	European Economic Area
	Non cooperative countries and territories