The multiplicity and complexity of tax provisions applicable to real estate sometimes sow confusion in the minds of investors and ends up making real estate less attractive. A good knowledge of real estate taxation remains today the safest way to optimize your investment. This file takes stock of the various measures affecting real estate assets and takes into account the latest reforms. However, it does not address taxation that applies to complex structures or tax exemption operations.
Taxation of property income
The annual declaration of land revenue is binding on all investors. If you receive more than € 15,000 in annual rent, you have no choice, you must opt for the real plan, an irrevocable option for 3 years.
Regime of the real
Each year, the investor declares the income and expenses on the special declaration form for land revenue ( CERFA 2044 ). The information folder gives all the necessary information on deductible expenses . They generally concern:
- Expenses for maintenance, renovation or repair.
- Unpaid rent insurance.
- Borrowing interest.Co-ownership charges not charged to the tenant.
- The property tax.
The land micro
If the annual rental income is less than 15 000 € , you can opt for the regime of micro land, but nothing prevents you to choose the regime of the real even if your property income is low. This plan greatly simplifies the declaration. No need to use 2044, since the only thing to do here is to postpone the amount of gross rents. The tax authorities will apply a standard abatement of 30% .
Note that this is a faculty and not an obligation, but you will understand: if the deductible expenses are higher than the package, it will be more interesting to opt for the regime of the real.
Taxation of capital gains
The taxation of real estate capital gains has been the subject of numerous changes over successive financial laws. Note two new measures effective January 1, 2016:
- Renewal of the 30% flat tax on the sale of building land.
- Total exemption on the capital gain if the sale is made for the benefit of a social lessor.
Taxation applies to all private assignments, whether they concern immovable property or the related annexes, except for the exemptions provided by the legislator, such as:
- The sale of the main residence .
- The first assignment of real estate (even if it does not concern the principal residence).
- Sales less than € 15,000. (1)
- Sales of goods over 30 years (exemption from capital gains and social security contributions).
- Sales to social landlords. Sales made by persons holding a disability card or under certain conditions people living in a retirement home.
The calculation is established in 3 steps:
- Determination of gross capital gain. This is established by deducting the purchase price (plus the various costs related to the acquisition) at the transfer price (plus selling expenses).
- Calculation of tax deductions per year of income tax and social security contributions.
- Calculation of income tax at the rate of 19% and social security contributions at the rate of 15.5% . (2)
(1): the ceiling is understood by operation. It is thus possible to benefit from the exemption on several sales during the year.
(2): the calculation is done separately.
Surcharge on capital gains over € 50,000
Since 1 January 2013, a surcharge has been applied on real estate gains above € 50,000. See here
Calculation of the discount rates
|Duration of detention||In respect of income tax||As social security contributions|
|Under 6 years||–||–|
|From 6 to 21 years old||6%||1.65%|
|22 years old||4%||1.60%|
|More than 22 years||Exoneration||9%|
|After 30 years||Exoneration||Exoneration|
The land deficit mechanism
Little or badly used, the mechanism of the land deficit allows to impute the negative result on the declaration of taxes on the income within the limit of 10 700 €. This amount is assessed without taking into account the interest on the loan. Note that the portion of the deficit above the ceiling can be carried forward for the next 10 years , provided that the property is leased until the end of the third year following the postponement.
French non-residents are subject to the same tax rules, especially since the reinstatement of social security contributions on 1 January 2016 (1) , except for exemptions. Non-residents do not benefit from the exemption for the principal residence or a first real estate sale. On the other hand, the administration grants them a specific exemption limited to € 150,000 under the twofold condition:
- For EU members , the sale takes place within 5 years of expatriation.
- That the property has been the principal residence of the person concerned for at least 2 years.
(1): deleted by the European directive in 2015.
Real estate held abroad
You are not required to report property held abroad if it serves as a second home. Only rental income from real estate held abroad is reportable in the property and taxable income category – unless otherwise agreed opposite between France and the country of residence – in the same way as property held in France. The same goes for the declaration of the capital gain. We must follow the rule of the tax treaty between countries when it exists. In his absence, you will pay the capital gain in France.