Capital gains tax for non-residents: calculation and allowances

The capital gain made by a non-resident seller follows stable French rules, even though the figures vary with every sale. The calculation starts from the sale price, deducts the acquisition price increased by fees and supported works, then applies allowances that grow with the length of ownership, up to a full exemption of the gain after a long holding period. Certain situations, a main residence in France or a first sale of a second home under conditions, may escape taxation. The country of residence adds a decisive layer: tax treaties and, outside the European Union, a possible withholding. This guide details these mechanisms, following on from the complete journey for selling your property from abroad.

When is a capital gain taxable for a non-resident seller?

The principle of territoriality is simple: French capital gains tax applies to properties located in France, whatever the seller’s residence. Living abroad does not shift the taxation of the property; it adds coordination rules, examined below, between France and your country of residence.

The gain itself is born of a comparison: the actual sale price on one side; the acquisition price, increased by certain fees and works, on the other. If the first exceeds the second, the difference is a capital gain; if not, the sale produces a loss and is not taxed as a gain. The situation is assessed on the day the authentic deed is signed: that date determines your tax residence, the elapsed holding period and the applicable regime. Selling in the same year you change your country of residence therefore deserves particular attention, since how your residence is classified on that day can weigh on the whole treatment.

How is the capital gain calculated?

The calculation follows an unchanging order. You start from the sale price, as stated in the deed, reduced by certain costs borne by the seller upon the sale. You then deduct the acquisition price, the one shown in your purchase deed, or the value retained upon a gift or an inheritance. That acquisition price is increased, at your choice and subject to proof, by the fees actually paid at purchase, or by a flat-rate increase provided for by the rules. Works are added, on condition they are proved by invoices and have not already been deducted, for instance from rental income.

This is where files are won or lost. A non-resident seller who has kept the purchase deed, the works invoices and the fee statements holds a solid basis; the one who must reconstruct those documents from abroad, years later, often discovers that memory is no substitute for an archive. Build this file before marketing: every missing invoice is a tax base that swells.

The capital gains simulator lets you project this calculation while gathering those documents, then discuss on a concrete basis with the notary and, where applicable, with your adviser in your country of residence.

How do the allowances apply according to the holding period?

The taxation of the gain is softened by the length of ownership: the longer you have owned the property, the more the taxable share of the gain shrinks, under a progressive scale set out in the rules. In due course, a sufficiently long holding leads to a full exemption of the gain.

Two details matter for a non-resident. First, the holding period is generally counted from the date of acquisition, the date of the deed, gift or inheritance, to the day of the sale: a few months more or less can change the treatment, and the timing of a sale is sometimes chosen in light of that data. Second, the allowances do not all run at the same pace depending on what they concern, the tax itself and the social charges: a gain may be partly exempt for one and not yet for the other. That gap, specific to non-residents’ sales, justifies checking your situation with an adviser rather than reasoning from half-remembered reading.

Which special cases can exempt the sale?

Some situations fall outside the common rules. The main residence first: if the property is your main residence in France on the day of the sale, the gain may be exempt, provided the occupation is actual and demonstrable, which can be debated when you live abroad for part of the year. The first sale of a second home next: an exemption may apply under conditions, notably reinvesting the sale price in a purchase intended for your own home, within a period and under conditions set out in the rules.

Other cases exist, expropriation, a sale to a body in charge of housing, and come under particular regimes. What all these exemptions have in common: they must be proved. The burden of gathering the documents, dates of occupation, proof of reinvestment, references of the applicable rules, falls on you, and it is prepared before the signature, while the options remain open.

What is the withholding tax for a seller outside the European Union?

When the seller resides outside the European Union, the notary receiving the deed generally operates a withholding: a fraction of the price is retained upon signature, as a deposit on the tax potentially due on the gain. The balance of the price is only transferred to you after that retention, and the regularisation follows, downward if the tax actually due is lower, upward in the opposite case.

This mechanism has direct practical consequences for a non-resident: it temporarily reduces the funds available after the sale, it must be anticipated in your cash-flow plans, and it is calculated on the basis of a complete file, hence the importance of the invoices and documents mentioned above. Waivers and adjustments exist depending on the case: this is a question to put systematically to the notary from the preparation of the deed, not after the signature.

What role does your country’s tax treaty play?

France has signed numerous tax treaties designed to prevent double taxation. Depending on the country where you reside, a treaty may maintain the taxation of the gain in France, share it differently, or organise the crediting of the French tax against what you owe in your country of residence. It cannot be guessed: it must be read, article by article, against your situation.

That is the purpose of the country-by-country guides: providing the frame of reference before you make decisions. Social charges add to this, whose treatment depends on different treaties and on whether your country is party to social security agreements: the guide devoted to social charges on resale develops that point.

The following table sums up the notions to master before selling:

Notion	What it means	To check with an adviser
Acquisition price	The price originally paid, increased by justified fees and works	The original deed, the invoices, the chain of gifts and inheritances
Holding-period allowance	A progressive reduction of the taxable share, up to exemption after long ownership	The exact acquisition date and the pace specific to each levy
Main residence exemption	No taxable gain if the property is your main residence on the day of the sale	The actual occupation on the day of the sale and its proof
First sale of a second home	A possible exemption under reinvestment conditions	The schedule and terms of reinvesting the price
Withholding tax	A deposit retained by the notary for sellers outside the European Union	Your country of residence, the waiver conditions, the regularisation
Tax treaty	The agreement sharing the right to tax between France and your country	The applicable treaty and how it reads against your situation

To discover the other sale and transmission subjects, browse the Journal’s Sale & transmission category, where this guide and its neighbours are brought together.

Every sale has its own history of acquisition, works and successive homes. If you want to know where you stand before deciding on a sale schedule, the personal study offered by French Realty lets you lay your situation out flat with your dedicated contact and identify the documents to gather.