A property tax lawyer in Paris steps in before each major decision about your assets: buying, letting, selling or passing on a property. Tax applies at each of these stages, and the rules add up. A structure chosen at purchase produces its effects until the resale, sometimes decades later. Our role is to shed light on these choices before they become irreversible.
Our firm of tax lawyers assists individuals, investors and families who own real estate. Beyond the role of property tax adviser, a property tax lawyer can also represent you before the tax authorities. The tax team is headed by Harry Allouche (Maître), a lawyer (avocat) admitted to the Paris Bar and the Quebec Bar. Every situation is different: this page sets out general principles and is not legal advice.
Choosing how to hold your French property
The first question concerns the ownership structure. You can buy directly, alone or in joint ownership (indivision). You can also hold the property through a property holding company (SCI, société civile immobilière), or separate the usufruct from the bare ownership. Each option changes how rental income, capital gains and the transfer to your heirs are taxed.
Direct ownership
Direct ownership remains the simplest option to manage. Rental income is added to your personal income, and a sale follows the capital gains rules that apply to individuals. It also gives access to the exemption for your main residence. However, it offers little flexibility to organise a gradual transfer of your assets.
The property holding company (SCI)
An SCI makes joint management easier, and allows assets to be passed on through the sale or gift of shares. However, it requires carefully drafted articles of association and rigorous management. Its tax treatment depends on the options chosen, which calls for prior analysis. The sale of shares follows its own rules, which we explain on our page on the transfer of shares in an SCI.
Split ownership (démembrement)
Split ownership separates the usufruct, which gives the right to use the property or receive its rent, from the bare ownership. For transfer duties, Article 669 of the French Tax Code (CGI) values the usufruct according to the usufructuary’s age. Thus, the usufruct of a person aged 65 is worth 40% of full ownership. This mechanism is often used to prepare a transfer of assets. We explain it in detail in our analysis of split ownership, usufruct and IFI.
Planning for capital gains tax on French property
The sale of a property held by an individual often generates a taxable capital gain, under Article 150 U of the CGI. The same article provides for several exemptions. The most widely known covers the seller’s main residence on the date of sale.
Another case covers the first sale of a home that is not the seller’s main residence. The seller must not have owned their main residence during the four preceding years. The exemption then applies only to the portion of the price that is reinvested, subject to conditions. These reinvestment conditions must be checked before the sale, not after.
Calculating the purchase price correctly
The capital gain is calculated from a purchase price that Article 150 VB of the CGI allows you to increase. For a purchase for consideration, acquisition costs can be taken at their actual amount or at a flat 7.5%. The cost of works carried out by a contractor is also added. For a building sold more than five years after purchase, a flat 15% increase applies without any proof of works.
Taking the holding period into account
Article 150 VC of the CGI provides an income tax allowance that increases with the holding period. It reaches 6% per year beyond the fifth year, then 4% for the twenty-second year. The property is therefore exempt from income tax after twenty-two years. This calculation concerns income tax only: we check all the levies due before any sale.
| Holding period | Income tax allowance |
|---|---|
| Up to the 5th year | No allowance |
| From the 6th to the 21st year | 6% per year |
| 22nd year | 4% |
| Beyond the 22nd year | Exemption from income tax |
Using a property deficit without errors
When your expenses exceed your rental income, you record a property deficit (déficit foncier). Article 156 of the CGI allows you to set it off against your overall income, up to €10,700. This limit applies excluding loan interest. The portion relating to interest and any excess are set off against your property income over the following ten years.
A property deficit needs preparation: the nature of the works and their timing determine its effectiveness. We check with you which expenses count in the calculation and when to incur them. This analysis limits the risk that a poorly constructed deficit is challenged in a tax audit.
Managing your French real estate wealth tax (IFI)
The real estate wealth tax (IFI, impôt sur la fortune immobilière) is payable when the value of your real estate assets exceeds €1,300,000, under Article 964 of the CGI. For French residents, the tax base includes assets located in France and outside France. The value is determined according to the rules for inheritance duties (Article 973 of the CGI). Your main residence benefits from a 30% allowance on its market value.
Certain debts reduce the taxable base. Article 974 of the CGI covers in particular debts existing on 1 January and borne by you. They must relate to taxable assets, for example to their acquisition or upkeep. A reduction applies to net taxable assets between €1,300,000 and €1,400,000 (Article 977). Finally, Article 979 caps IFI. Combined with your income taxes, it cannot exceed 75% of your worldwide net income for the previous year.
Your tax residence also matters. Moving abroad or returning to France can change the scope of the assets to be declared. We cover these situations in our article on keeping property in France after moving abroad.
Defending you when the declared value is audited
The value of a property remains an estimate, and the tax authorities can challenge it. Disputes often concern the value used in an IFI return, a gift or an estate. Article L. 180 of the French Tax Procedure Code (LPF) limits, in principle, the reassessment period to the end of the third year following the tax year or the registration. This period assumes that the tax liability was sufficiently disclosed and, for IFI, that the return was filed.
Otherwise, Article L. 186 of the LPF extends the reassessment period to the end of the sixth year following the taxable event. An IFI taxpayer who does not state the net taxable value of their assets is exposed to a default assessment (taxation d’office) under Article L. 66 of the LPF. In that case, Article L. 193 of the LPF places on you the burden of proving that the tax should be reduced.
A value is defended with concrete evidence: comparable sales, condition of the property, letting or planning constraints. We build this file from the first request from the tax authorities. If proceedings are brought, our tax audit lawyer assists you at every stage, including litigation if necessary.
How we assist you
We start with a review of your real estate assets: properties, ownership structures, financing, income and plans. This snapshot reveals the tax issues ahead, at purchase as well as on resale. We then cost several scenarios and compare their effects on rental income, capital gains, IFI and the transfer of your assets. You decide on the basis of a written, sourced analysis.
- Review of the ownership structure and preparation, with your notary, of an SCI or split ownership.
- Capital gains simulation before signing a preliminary sale agreement.
- Review of the property deficit and the schedule of works.
- Preparation of the IFI return: valuation of properties, deductible debts, cap.
- Assistance during a tax audit, responses to the tax authorities and representation in the event of a dispute.
Our fees are set out in a written fee agreement, as required by Article 10 of Law No. 71-1130. We work with your notary and your chartered accountant when the matter requires it. To discuss your property plans, you can contact our team.
Frequently asked questions
When should you consult a French property tax lawyer?
Ideally before you buy, sell or gift a property, while the options are still open. The ownership structure chosen at purchase produces its effects until the resale and the transfer to your heirs. A lawyer also steps in when the tax authorities challenge a return, for example the value declared for IFI.
How are capital gains on the sale of a second home in France taxed?
Capital gains on real estate sold by individuals are taxable under Article 150 U of the CGI, unless an exemption applies. The purchase price can be increased by acquisition costs, at a flat 7.5%, and by works, at a flat 15% after five years of ownership (Article 150 VB). Article 150 VC provides an income tax allowance that leads to an exemption after twenty-two years of ownership.
How much of a property deficit can you deduct from your overall income?
Article 156 of the CGI allows a property deficit to be set off against overall income up to €10,700, excluding loan interest. The excess and the portion relating to interest are set off against property income over the following ten years.
Above what level of assets is IFI payable?
IFI is payable when the value of your real estate assets exceeds €1,300,000, under Article 964 of the CGI. Your main residence benefits from a 30% allowance on its market value (Article 973). Certain debts are deductible, and the tax is subject to a cap set by Article 979.
How long can the French tax authorities challenge the value of a property?
For IFI and registration duties, Article L. 180 of the LPF sets, in principle, a period that runs until the end of the third year following the tax year or the registration. This period assumes that the tax liability was sufficiently disclosed. Otherwise, Article L. 186 of the LPF provides a period that runs until the end of the sixth year following the taxable event.
Official sources
- Article 150 U of the French Tax Code (CGI) (capital gains on real estate held by individuals): Légifrance (in French)
- Article 150 VC of the French Tax Code (CGI) (allowance for the holding period): Légifrance (in French)
- Article 156 of the French Tax Code (CGI) (setting off property deficits): Légifrance (in French)
- Article 964 of the French Tax Code (CGI) (real estate wealth tax): Légifrance (in French)
- Article 973 of the French Tax Code (CGI) (valuation of assets and main residence): Légifrance (in French)
- Article L. 180 of the French Tax Procedure Code (LPF) (reassessment period for IFI and registration duties): Légifrance (in French)
Law as at 1 October 2026. Content written under the responsibility of Harry Allouche (Maître). This content provides general information and is not legal advice. Every situation is different: the firm commits to the means it deploys, with no promise of outcome.
