Taxes and fees when buying real estate in France: what do you need to know?

How to properly buy real estate in France and avoid taxation?
What is the property and residence tax in France?
What are the features of property taxes in France?

Acquisition of real estate in France

If you intend to buy property in France for vacation or permanent residence, you should understand that you will need to pay not only the cost of the property itself but also the associated registration fees. Throughout the entire period of ownership, you will need to regularly pay property taxes and utility bills.

Russia and France have signed an agreement to prevent double taxation, which helps avoid situations where the same income is taxed in both countries.

Tax Agreement

According to this agreement, taxes related to income and property are paid in the country where the income was earned or where the property is located. This rule applies to all types of property taxes, income taxes, and taxes on profits generated from business activities.

Thus, for the Russian tax authorities, it is sufficient to provide documentary evidence of the taxes that were paid in France.

Tax residents

Individuals who spend more than 180 days in France during a calendar year automatically become tax residents of the country and, accordingly, must file a tax return. However, if they do not have any sources of income in France, they will not be required to pay taxes.

In this case, it is necessary to fill out a declaration indicating the amount as "zero," which confirms the absence of tax obligations. Regarding tax aspects related to real estate in France, it would be wise to consult experienced tax advisors who can help you optimize your taxation.

Expenses for purchasing real estate

The expenses associated with purchasing real estate in France can be significant. The main state commissions and registration fees when buying secondary housing amount to about 6-7% of its value. These payments are made by the buyer through a notary at the time of signing the final contract.

This amount includes both registration fees and the notary's fee, which is just under 1% of the purchase price.
The cost of notary services is fixed and does not depend on the specific notary.
If several notaries are involved in the process, it does not increase the total expenses.

Purchase of primary housing

If you are planning to make a deal for the purchase of a new property, keep in mind that the stated price also includes value-added tax (VAT), which is currently 19.6% according to French laws.

Annual taxes and obligations

As for annual taxes and other expenses, the main tax for property owners in France is the property tax, which includes the land tax (taxe foncière).

This tax is payable annually by both residents and non-residents of the country.
The size of this tax is determined by local authorities and varies depending on the region, area, and market value of the property.
Typically, in more prestigious areas, the amount of this tax tends to be higher.
The tax for each property is calculated individually, based on the cadastral rental value as of January 1st of each year.

Property tax in Russia

In the Russian Federation, it is difficult to determine the property tax as a percentage of its value, since according to established regulations, the tax rate decreases as the price of the taxable object increases.

The property tax payment must be made in October of each year. Let's look at the average rates for the year:

For apartments in Paris with an area of 50 to 70 square meters, the tax ranges from 150 to 300 euros.
In Nice, it ranges from 500 to 800 euros.
For a villa on the French Riviera with an area of 200-250 square meters, this figure ranges from 1000 to 2000 euros.

There is also a residence tax in France.housing tax), which burdens those who actually live in the apartment or house. If the property is rented out, the tenant is responsible for paying the tax; in cases where the owner resides in their own home, they are obligated to pay both taxes: for residence and for property.

If the property is not rented out, the owner pays the residence tax, even if they only use the property occasionally. Overall, the residence tax rates in cities are slightly higher compared to rural areas. The deadline for paying this tax is November of each year.

Payment of the residence tax

The amount required for the residence tax for residents is determined based on the declared income and the assessed value of the property as of January 1st of each year. For non-residents, the amount is usually approximated to the property tax.

In addition to this, the residence tax includes contributions for a television license if a television is owned. In 2012, the television tax amounted to approximately125 eurosper year, and its amount did not depend on the number of televisions in the house.

The total taxes for villas

For example, for a villa with an estimated value of 1 to 2 million euros, the total amount of the two taxes can range from2000to3000 eurosannually. When purchasing a villa for5 million eurosThe total amount of taxes can reach10,000 eurosper year.

Luxury taxISF, Wealth Solidarity Tax) is charged on property whose value exceeds1.3 million eurosSince 2012, the tax rate system has been reduced from six categories to two.0.25%and0.5%.

Wealth tax system

The wealth tax is calculated using the following scheme:

Up to 1.3 million euros0%,
From 1.3 to 3 million euros –0.25%,
More than 3 million euros –0.5%.

This system, introduced by Nicolas Sarkozy, was in place until January 1, 2013. However, the French authorities plan to return to the previously existing scheme, where rates could vary from0.55%to1.8%and the tax-exempt minimum would be approximately870,000 euros.

Ways to avoid luxury tax

There are several ways to avoid paying this tax. One example is registering the purchase of real estate through a specialized French company.SCI (Société Civile Immobilière)representing a civil society engaged in real estate ownership.

The procedure for creating such a company is straightforward and takes place through a notary at the time of the transaction. The services for setting up such a company are estimated to cost approximately1500-2000 euros.

Special property tax in France

In a number of cities and well-known resorts in France, a special tax has been introduced that applies when real estate has not been used for more than two years. The basis for determining the amount of this tax is the cadastral value of the property. If the property is not used for three years, the tax rate is 10%.

Sale villa in Grima 6 101 630,00 $

France,Grima

5 Bedrooms

5 Bathrooms

353 м²

Sale house in Antibes 2 752 786,00 $

France,Antibes

5 Bedrooms

8 Bathrooms

577 м²

Sale flat in Courchevel 4 254 347,00 $

France,Courchevel

5 Bedrooms

251 м²

Sale flat in Nice 580 883,00 $

France,Nice

3 Bedrooms

75.9 м²

Sale flat in Antibes 4 142 391,00 $

France,Antibes

3 Bedrooms

1 Bathroom

210 м²

Sale flat in Toulouse 215 071,00 $

France,Toulouse

2 Bedrooms

68 м²

Starting from the fourth year, this rate increases to 12.5%, and for each subsequent year of non-use, the tax rises to 15%. This tax applies to cities such as Paris, Toulouse, Lyon, Montpellier, Cannes, Grasse, Antibes, and Nice.

Utility expenses for property owners

As for utility expenses, owners of apartments and houses with shared amenities are required to pay for the maintenance of common facilities. This includes security, care for green areas, pool maintenance, and other similar services. These expenses are known ascondominium feesPayments for utilities, such as water, electricity, and gas, are made separately based on actual consumption. Owners of individual houses and villas are not required to pay for utilities; they only need to cover their personal expenses. Utility payments can be made through automatic deductions from bank accounts.

Approximate sizes of utility payments

The approximate amounts of utility payments for permanent residence are as follows:

For apartments in Paris with an area of 50-70 square meters in a building with an elevator, the cost ranges from 100 to 200 euros per month.
For similar apartments in Nice – from 150 to 180 euros;
For a villa on the French Riviera with an area of 200-250 square meters, the price ranges from 300 to 600 euros per month.

Taxes on rental income and capital gains

As for rental, the tax on income from rental property for foreign citizens is set at 20%. If the rented property...furnishedYou can receive a deduction on the interest from a loan if you have one. The capital gains tax, which is charged on the difference between the purchase and sale price of real estate, is paid to the notary at the time of the transaction. For non-residents who are not citizens of EU countries, the VAT rate is 33.3% in addition to 15.5%, starting from August 9, 2012, and this amount is calculated based on the difference between the purchase and sale prices.

Reduction of tax over time

Over time, the size of the tax decreases.

After five years of property ownership, the tax rate decreases by 2% for each subsequent year;
After 17 years - by 4%;
After 24 years - by 8%.

Thirty years after the acquisition, capital gains tax is not levied. It should also be noted that this tax does not apply to housing that is the owner's primary residence.

Inheritance tax

Speaking of inheritance tax, under French law, this tax is not levied between spouses and close relatives, such as brothers and sisters. However, between parents and children, this tax has a progressive rate. As of 2012, after the standard tax deduction of 159,325 euros, the tax calculation starts from an amount of 8,072 euros, and the tax rate ranges from 5% to 40% of the assessed value of the property.

Conclusion

Despite the many nuances related to taxation and expenses when purchasing real estate in France, the opportunities that this country offers its owners are simply invaluable. As I have found out, understanding all aspects of taxation can be a challenging task, but the right approach and consultations with qualified specialists can significantly ease this process.

Every step, from choosing the type of property to finalizing the deal and paying taxes, requires a thoughtful approach. Understanding the terms of the double taxation avoidance agreement between France and Russia is just one of the key points that can help avoid unforeseen complications in the future. This aspect simplifies life for Russians wishing to invest in French real estate, as it provides them with clear taxation pathways.

Regular payments

Regular payments, such as property tax and residency tax, should not be seen as a burden, but rather as an investment in the comfort of living and a fulfilling life in this amazing country. Investing in real estate can serve both as a source of income and as an opportunity to provide your family with a cozy place for relaxation and living.

Recommendations

I have come to the conclusion that working with qualified tax consultants, as well as communicating with locals, can provide invaluable assistance. They can offer:

Optimal taxation schemes;
Associated costs;
Assistance in simplifying the purchasing process.

Opportunities in France

In France, where traditions and modernity intertwine, everyone can likely find suitable housing for themselves. Whether it is:

Apartment in Paris,
Villa on the French Riviera,
A secluded cottage in the countryside —

All of them will become part of a new life, rich in experiences and opportunities. In conclusion, I want to emphasize that buying real estate in France is not just a financial investment, but also a step towards fulfilling the dream of living in a country with immense culture and beauty.