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The costs of owning a property in France differ depending on a number of factors. However, as a general guide, owners should bear in mind the following.

• Income tax – payable by non-residents on the net rental income at a progressive rate starting at 25% (the rate can be less if the owner of the property proves that as a French resident his income tax rate would be lower, but this is rarely the case). Owners are considered residents if they spend more than 180 days in the country each year, or if either their home, job or centre of economic interest is in the country. They would then be taxed on their worldwide income.
  
  There are a number of other factors affecting the income tax paid on rental income, and for a full understanding of the complex tax system in France the buyer should consult with a professional. For example, potential buyers should bear in mind that renting the property furnished means being taxed in a different way to renting it unfurnished. If deductible expenses are expected to be high, then it will probably be beneficial for tax purposes to rent it unfurnished. To rent the property furnished means being taxed as a professional landlord and paying a professional tax. This can be expensive, but in some cases can work out costing less than renting it unfurnished with few deductions from the net rental income.
• Property tax – takes two forms: ‘taxe d’habitation’ and ‘taxe fonciere’. The first must be paid by whoever lives in the building; the latter will be paid by the owner of the property, though is often reimbursed by the tenant, depending on the agreed terms of the contract.
• Wealth tax – payable when an individual’s net wealth is over €720,000. For non-residents this applies to their assets in France. Wealth tax is charged at a progressive rate, from 0.55 – 1.8% annually. Business assets are exempt.
• Capital gains tax – payable on any profit made on the sale of the property (after deductions and inflation relief), at a rate that depends on the period of ownership. If the property has been owned over 15 years, there is no tax to pay; after five years of ownership, the rate is reduced by 10% for every subsequent year of ownership. Within the first five years of ownership, capital gains tax is charged at 16%.

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Documents and Reports

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