Property taxes in Frances

Taxes included in the notary fees

When buying a property in France, it is necessary to pay notary fees. These fees represent a sum that must be paid to the notary at the time of signing the sales agreement. Notary fees are a tax on the sale of real estate. Specifically, the land registry tax is a tax paid to the Treasury when signing the sales agreement and is intended to finance the expenses of the state, local authorities, and municipalities. The amount of these fees varies depending on the value and location of the property.

 

Property tax

Property tax is an annual tax that property owners in France must pay. It is generally calculated based on the rental value of the property. This amount is set by the municipality where the property is located and can vary from one municipality to another.

 

Housing tax

Housing tax is a local tax collected for the benefit of local authorities. Its amount varies depending on the municipality where the property is located, and its tax rate is decided by the territorial collectivities. The housing tax also depends on the characteristics of the taxable property, such as its size or level of comfort, as well as the personal situation of the occupant as of January 1st of the tax year, including income and household composition. Whether you are a property owner, tenant, or occupant of a property free of charge, you may be liable for housing tax for your primary residence or second home.

 

Real estate wealth tax

If you own a significant real estate portfolio, you may be subject to the real estate wealth tax (IFI) if the net value of your wealth exceeds €1,300,000. This value includes all real estate and real estate rights that you hold directly or indirectly on January 1st of the tax year. There are partial or total exemptions for certain assets, and some debts may be deducted from the value of your wealth before taxation.

 

Income Tax

Even if you live abroad, if you receive income from a French source such as rent, you must declare it and file a tax return in France. There is no minimum threshold for declaration, all income must be declared, even if it is not taxable. Your tax will be calculated progressively based on the level of your income and the composition of your household. Non-residents are subject to a flat rate of approximately 20% or 30% on their taxable income in France. The income tax return is filed starting from April and the tax assessment notice is received at the end of the summer of the current year.

 

The 3% tax for legal entities

The tax on the market value of real estate owned in France, directly or indirectly, by any legal entity, French or foreign, with or without legal personality, is provided for in Articles 990 D to 990 G of the General Tax Code (CGI).

This tax is equal to 3% of the market value of property and real estate rights owned in France on 1 January of the tax year and includes several possible exemptions. However, certain entities are exempt from this tax.

 

In summary, purchasing a property in France involves paying several taxes. Notary fees, property tax, housing tax, and real estate wealth tax are the main taxes and fees to be paid when buying property in France. It is important to understand these costs and choose a competent and reliable lawyer to ensure a successful real estate transaction.