Capital gains tax (CGT) in France applies when you sell certain types of assets — such as real estate or shares — for more than you originally paid for them. Understanding how capital gains tax allowances work is essential for anyone looking to sell a property, liquidate investments, or plan their financial future efficiently.
In France, the tax system offers various allowances and reliefs that can reduce the amount of tax you owe on your gains, depending on factors like how long you’ve held the asset, the type of asset, and your personal situation. Knowing these rules is not just a matter of compliance — it’s also a way to optimize your tax planning and potentially save significant amounts of money.
Understanding Capital Gains Tax and Current Rates
In France, capital gains tax (CGT) refers to the tax you pay on the profit made when selling certain types of assets, most commonly real estate (other than your main residence) or financial investments like shares. The taxable gain is generally the difference between the sale price and the original purchase price, minus eligible costs such as renovation work (with valid invoices) or notary fees.
Capital gains on real estate are taxed at a flat rate of 19%, plus 17.2% in social contributions, bringing the total to 36.2%. However, this applies only after deducting allowances based on the length of ownership. For example:
- After 5 years of ownership, you start benefiting from progressive tax relief.
- After 22 years, the capital gain is fully exempt from the 19% tax (though social contributions still apply).
- After 30 years, the gain is fully exempt from both tax and social contributions.
Note: For residents of the EU, EEA, Switzerland, or the UK, the social contributions may be replaced by a 7.5% solidarity levy instead.
It’s important to note that if the property you’re selling is your main residence, the capital gain is fully exempt from CGT, regardless of the gain amount or how long you’ve owned it. For other types of assets, like shares or business sales, different tax rates and allowances may apply, depending on the asset category and your personal tax situation.
Understanding which rate applies to your specific case is crucial, as it affects how much you ultimately pay and what planning opportunities you can use.
For a deeper dive into how capital gains tax works in France, check out our dedicated guide: Capital Gains Tax in France.
Exemptions and Reliefs Available
France’s capital gains tax system includes several exemptions and reliefs designed to reduce the taxable amount or eliminate the tax entirely under certain conditions.
The most common exemption is for the sale of your main residence. If the property you are selling is your principal home at the time of sale, you are fully exempt from capital gains tax, regardless of the gain’s size or how long you’ve owned the property.
For other real estate, such as second homes or rental properties, time-based relief plays a major role. As mentioned earlier, after 22 years of ownership, you are fully exempt from the 19% capital gains tax (though you still owe social contributions until 30 years). This relief increases progressively each year of ownership after the fifth year, encouraging long-term holding.
In some cases, sellers may also qualify for specific exemptions, such as:
- Selling a property to fund retirement if you meet certain age and income conditions.
- Selling under exceptional circumstances (for example, due to disability or specific social situations).
- Small gains under certain thresholds, depending on the type of asset (e.g., shares or movable goods).
Additionally, business asset disposals may benefit from tailored reliefs, such as the business asset disposal relief(exonération des plus-values professionnelles), which provides substantial tax reductions under specific conditions, especially for small businesses or entrepreneurs transferring their operations.
If you’re selling through a corporate structure, see our guide on French Capital Gains Tax with a Corporate Tax Company.
Strategies to Minimize Capital Gains Tax
While capital gains tax is often unavoidable, there are several smart strategies you can use to reduce your tax liability when selling property or other assets in France.
One of the most effective approaches is timing your sale carefully. Since the capital gains tax relief increases the longer you hold the property, waiting until you pass key thresholds — such as 22 years for tax exemption or 30 years for full social contributions exemption — can significantly reduce the tax due.
Another useful strategy is properly tracking and deducting eligible expenses. Renovation work, improvements, and certain purchase costs (like notary fees and agency commissions) can be added to the purchase price, reducing the taxable gain. However, to claim these deductions, you must have valid invoices and documentation — so keeping good records is essential.
If you are married or in a civil partnership (PACS), consider how jointly owned property is declared, as splitting ownership between spouses or partners can sometimes create more favorable tax treatment.
For those selling non-residential assets, such as shares or business assets, tax-efficient investment vehicles like PEA (Plan d’Épargne en Actions) or life insurance contracts (assurance-vie) can offer additional tax advantages when structured properly.
Finally, seeking professional advice can make a big difference. French tax law is complex, and personalized strategies — tailored to your assets, residency status, and long-term financial goals — can help ensure you’re not paying more tax than necessary. At French Tax Online, we specialize in guiding individuals through these optimizations and helping them stay compliant while minimizing costs.
If you’re renting furnished under LMNP or LMP, special capital gains tax rules may apply. Learn more here: The Different Taxes in LMNP, Taxes on Capital Gain in LMNP, and Taxes on Capital Gains in LMP.
Frequently Asked Questions (FAQ)
What is the capital gains tax allowance in France for 2025?
Unlike some countries, France does not offer a fixed annual tax-free capital gains allowance. Instead, the system provides time-based relief: after five years of ownership, you benefit from progressive tax reductions, with full exemption from the 19% capital gains tax after 22 years and from social contributions after 30 years.
Does capital gains tax apply to my main residence?
No. The sale of your principal residence is fully exempt from capital gains tax in France, provided it is your main home at the time of sale. This exemption applies regardless of the sale price or the size of the gain.
How are capital gains on second homes or investment properties taxed?
Gains on second homes, rental properties, or land are subject to both the 19% capital gains tax and 17.2% social contributions, totaling 36.2%. These rates are reduced progressively over time, and additional surtaxes may apply for very large gains. For residents of the EU, EEA, Switzerland, or the UK, the social contributions may be replaced by a 7.5% solidarity levy instead.
Can renovation costs reduce my taxable capital gain?
Yes, but only if you have valid invoices and documentation. Qualifying improvement works (not routine maintenance) can be added to your property’s acquisition price, reducing the gain on which tax is calculated. Alternatively, if you’ve owned the property for over five years, you can opt for a flat 15% improvement allowance, even without receipts.
How can French Tax Online help me with capital gains tax?
At French Tax Online, we offer expert guidance on calculating your capital gains tax, identifying eligible deductions and exemptions, and structuring your sales or investments for optimal tax efficiency. We also provide free online CGT simulator to help you estimate your tax liability and can act as your tax representative if needed. With our team’s expertise, you can navigate the French tax system confidently and avoid unnecessary costs.