Property Capital Gains Tax in 2026: Calculation, Rates, Allowances and Exemptions

How do you calculate property capital gains tax when selling a property? Find out about the rates applicable in 2026, holding-period allowances, the main exemptions and a detailed example.

When an owner sells a property for more than they paid for it, they make a property capital gain. This gain may be subject to income tax and social security contributions.

However, the tax treatment depends on several factors: the type of property sold, its purchase price, work carried out, length of ownership and the seller's personal circumstances. Some sales, including the sale of a main home, qualify for a full exemption.

What is a property capital gain?

In principle, a property capital gain is the difference between:

• the adjusted sale price; and
• the adjusted purchase price.

The general formula is:

Gross capital gain = adjusted sale price – adjusted purchase price

If the result is negative, it is a capital loss. This generally cannot be offset against other income or capital gains from other property sales, except in specific circumstances.

The regime described in this article mainly applies to sales made by private individuals and certain companies not subject to corporation tax, such as property-owning companies (SCI) taxed under income tax rules.

It does not apply in the same way to:

• property dealers;
• transactions forming part of a professional activity;
• property held by a company subject to corporation tax;
• certain professional furnished rental activities.

Which properties are affected?

Property capital gains tax may apply to the sale of:

• a second home;
• a rental property;
• land;
• business premises held as private assets;
• a garage or parking space;
• a property right, such as usufruct or bare ownership;
• shares in certain property-rich companies, including SCI taxed under income tax rules.

A transfer may take the form of a sale, but in some cases also an exchange, contribution to a company or division of property.

How is the adjusted sale price calculated?

The starting point is the price stated in the notarised deed of sale.

Certain costs paid by the seller may be deducted from the sale price, provided they can be evidenced, including:

• estate agency fees paid by the seller;
• the cost of mandatory property surveys;
• mortgage release fees;
• certain compensation payments made to the buyer;
• certain costs directly related to the transfer.

Conversely, charges or compensation paid to the seller by the buyer may increase the sale price.

The French tax authorities list the main expenses that can reduce the sale price in their guidance on taxable property capital gains.

How is the adjusted purchase price calculated?

The purchase price stated in the deed may be increased by several categories of expenditure.

Purchase costs

The seller may use:

• either the actual amount of notary fees, registration duties and commissions paid on purchase, with supporting documents;
• or a flat rate of 7.5% of the purchase price, where the property was acquired for consideration.

It is therefore worth comparing the actual costs with the 7.5% flat rate.

Renovation and improvement costs

Construction, reconstruction, extension or improvement costs may increase the purchase price if they meet the tax requirements, particularly where they were carried out by a business.

Routine maintenance and repair costs are not always eligible.

The work must not already have been taken into account for income tax purposes, for example through a rental-property deficit or tax reduction.

Where a built property has been owned for more than five years, the owner can generally choose between:

• the actual amount of eligible work, on presentation of invoices;
• a flat rate equal to 15% of the purchase price, without having to prove that work was actually carried out for that amount.

Costs related to land

For building land, certain road, utility and distribution costs may also be added to the purchase price.

What if the property was received as a gift or inheritance?

For a property received as a gift or inheritance, the purchase price is replaced by the value used in:

• the deed of gift; or
• the inheritance declaration.

Certain duties and costs actually paid may be added to that value.

The 7.5% flat rate available for acquisitions for consideration does not automatically apply to properties received free of charge. In that case, the actual tax-allowable costs should be used.

What are the property capital gains tax rates?

After holding-period allowances are applied, the taxable property capital gain is subject to:

• 19% income tax;
• 17.2% social security contributions.

The maximum rate is therefore 36.2%, before allowances and any additional surcharge are taken into account.

Please note: after five years of ownership, income tax and social security contributions are no longer calculated on the same basis because their allowances increase at different rates.

Holding-period allowance table

Allowances only begin after the fifth full year of ownership.

For income tax:

• 6% for each full year from the 6th to the 21st year;
• 4% in the 22nd year;
• full exemption after 22 years.

For social security contributions:

• 1.65% for each full year from the 6th to the 21st year;
• 1.60% in the 22nd year;
• 9% for each full year from the 23rd to the 30th year;
• full exemption after 30 years.

Here is the full allowance schedule:

Completed ownership period Cumulative income tax allowance Taxable portion at 19% Cumulative social allowance Taxable portion at 17.2%

Up to 5 years0%100%0%100%6 years6%94%1.65%98.35%7 years12%88%3.30%96.70%8 years18%82%4.95%95.05%9 years24%76%6.60%93.40%10 years30%70%8.25%91.75%11 years36%64%9.90%90.10%12 years42%58%11.55%88.45%13 years48%52%13.20%86.80%14 years54%46%14.85%85.15%15 years60%40%16.50%83.50%16 years66%34%18.15%81.85%17 years72%28%19.80%80.20%18 years78%22%21.45%78.55%19 years84%16%23.10%76.90%20 years90%10%24.75%75.25%21 years96%4%26.40%73.60%22 years100%0%28%72%23 years100%0%37%63%24 years100%0%46%54%25 years100%0%55%45%26 years100%0%64%36%27 years100%0%73%27%28 years100%0%82%18%29 years100%0%91%9%30 years100%0%100%0%

Only fully completed years of ownership are taken into account. The rules and percentages are confirmed by the French tax authority.

Worked example: calculating a property capital gain

Take the example of an apartment:

• purchase price: €200,000;
• sale price: €350,000;
• ownership period: 15 completed years;
• deductible selling costs: €10,000;
• 7.5% acquisition allowance: €15,000;
• 15% works allowance: €30,000.

Step 1: adjusted sale price

€350,000 – €10,000 = €340,000

Step 2: adjusted purchase price

€200,000 + €15,000 + €30,000 = €245,000

Step 3: gross capital gain

€340,000 – €245,000 = €95,000

Income tax calculation

After 15 years of ownership, the income tax allowance is 60%.

€95,000 × 40% = €38,000 taxable capital gain

€38,000 × 19% = €7,220 income tax

Social security contributions calculation

After 15 years, the social security contribution allowance is 16.5%.

€95,000 × 83.5% = €79,325 taxable capital gain

€79,325 × 17.2% = approximately €13,644 in social security contributions

Estimated total tax

€7,220 + €13,644 = approximately €20,864

In this example, as the capital gain taxable for income tax purposes is below €50,000, the surcharge on high property capital gains does not apply.

The surcharge on property capital gains above €50,000

An additional tax may apply where the net capital gain taxable for income tax purposes exceeds €50,000.

Its rate ranges from 2% to 6%:

Net taxable capital gain Main surcharge rate

€50,001 to €100,0002%€100,001 to €150,0003%€150,001 to €200,0004%€200,001 to €250,0005%Over €250,0006%

A smoothing mechanism applies at the start of certain bands, between:

• €50,001 and €60,000;
• €100,001 and €110,000;
• €150,001 and €160,000;
• €200,001 and €210,000;
• €250,001 and €260,000.

The €50,000 threshold is generally assessed per seller. Therefore, where a property is owned by two spouses, civil partners or co-owners, each person's share must be considered.

This surcharge does not generally apply to building land.

When is a property capital gain exempt?

Sale of a main home

The capital gain made on the sale of a habitual and genuine main home is fully exempt from income tax and social security contributions.

The exemption also covers immediate and necessary outbuildings sold at the same time, such as:

• a garage;
• a cellar;
• a parking space;
• certain outbuildings close to the home.

The property must genuinely be the seller's main home. Temporary or artificial occupation immediately before the sale is not enough.

Where the owner has moved out before completion, the exemption may still apply if:

• the property was still their main home when it was put up for sale;
• it was not rented out or occupied in the meantime;
• the sale takes place within a period regarded as reasonable.

The tax authorities often accept a period of around one year, although the circumstances of the sale and market conditions may be taken into account.

First sale of a property other than a main home

The first sale of a property other than a main home may be exempt if the seller:

• has not owned their main home, directly or indirectly, during the four years preceding the sale;
• reinvests all or part of the sale proceeds in buying or building their main home;
• makes that reinvestment within 24 months.

If only part of the proceeds is reinvested, the exemption is proportional to the amount actually reinvested.

Sale price of €15,000 or less

A sale for €15,000 or less may be exempt from property capital gains tax.

For jointly owned property, this threshold is generally assessed based on each seller's ownership share, subject to specific rules for split ownership.

Property owned for more than 30 years

After 22 completed years, the capital gain is exempt from income tax.

However, social security contributions remain partly payable until the end of the 30th year.

Full exemption, including income tax and social security contributions, applies after 30 completed years of ownership.

Low-income elderly or disabled individuals

Certain pensioners and holders of a disability card may qualify for an exemption subject to conditions, notably based on:

• their reference taxable income;
• their position regarding French real estate wealth tax;
• the nature of their pension or disability.

As the thresholds are updated, they should be checked for the year of sale.

Moving into a care home or specialist facility

Subject to certain conditions, a person who moves into a medicalised care home or specialist facility may sell their former main home while retaining the exemption.

In particular, the sale must take place within the statutory time limit and the home must have remained vacant since the owner moved out.

Compulsory purchase

A capital gain arising from compulsory purchase may be exempt if at least 90% of the compensation is reinvested within 12 months in acquiring, building, rebuilding or extending a property.

Sale to a social housing body

Certain sales to social housing organisations, or to buyers undertaking to develop social housing, may qualify for an exemption subject to conditions.

Non-resident sellers

People who are no longer French tax residents may benefit from specific provisions, including a capped exemption when selling a property located in France.

The conditions notably concern:

• the period of prior residence in France;
• nationality or country of residence;
• the sale date;
• free use of the property;
• the amount of the capital gain.

An individual assessment by a notary or tax adviser is essential.

Non-professional furnished rentals: watch out for depreciation

Since the reform adopted under the Finance Act for 2025, the capital gain calculation for a non-professional furnished landlord (LMNP) may take into account depreciation deducted during the rental period.

In practice, tax-deductible depreciation may reduce the purchase price used to calculate the capital gain, increasing the taxable gain on resale.

Exceptions apply to certain categories of serviced residences. Before selling an LMNP property, a detailed calculation with a notary or accountant is strongly recommended.

SCI: which capital gains regime applies?

The treatment depends on the company's tax regime.

SCI subject to income tax

Where an SCI taxed under income tax rules carries out a non-professional activity, a sale generally falls under the private individual property capital gains regime.

The partners may then benefit from holding-period allowances and, where applicable, certain exemptions.

SCI subject to corporation tax

For an SCI subject to corporation tax, the capital gain is calculated from the property's net book value:

Sale price – net book value

Depreciation recorded in the accounts gradually reduces this net value and can therefore significantly increase taxable profit on resale.

The 22-year and 30-year holding-period allowances do not apply to companies subject to corporation tax.

Who calculates and pays the tax?

For most property sales, the calculation is carried out by the notary.

The notary:

• determines the taxable capital gain;
• checks supporting documents;
• applies allowances and exemptions;
• prepares the tax return;
• deducts the tax from the sale proceeds;
• pays the sums directly to the tax authorities.

The seller therefore generally receives sale proceeds net of capital gains tax.

The taxable gain must also be reported on the annual income tax return so that it is included in reference taxable income, without being taxed a second time. The process is detailed on the official French public finance website.

Which documents should you keep to legally reduce your capital gain?

Before selling, it is advisable to gather:

• the purchase deed;
• the breakdown of purchase costs;
• original invoices from contractors;
• proof of payment for the work;
• planning permissions;
• evidence of property survey costs;
• the sales mandate stating who pays the agency fees;
• documents relating to a gift or inheritance;
• proof of occupation when claiming the main-home exemption.

Receipts for materials purchased directly by the owner are generally not enough to increase the purchase price in respect of works.

Can you know the capital gain before putting a property on the market?

Yes. In fact, it is advisable to request an estimate before signing a preliminary sale agreement.

A calculation can show:

• the gross capital gain;
• expenses that can be taken into account;
• holding-period allowances;
• income tax;
• social security contributions;
• any surcharge;
• the net amount the seller will actually receive.

This estimate is particularly useful for a second home, rental property, land, inherited property or furnished rental property.

Frequently asked questions about property capital gains

Is a main home always exempt?

Yes, provided the property is the seller's habitual and genuine main home and the occupancy conditions are genuinely met. An administrative registered address alone is not enough.

Is DIY work deductible?

Materials purchased and work carried out personally are not, in principle, treated as work invoiced by a contractor. However, after five years of ownership, the 15% works allowance may be used for a built property, subject to the applicable conditions.

Is the outstanding mortgage deducted from the capital gain?

No. The amount still owed to the bank is not part of the tax calculation for the capital gain. It only reduces the net amount received by the seller after the loan is repaid.

Is mortgage interest deductible?

Interest paid to finance the purchase does not generally increase the purchase price for the purpose of calculating a private individual's property capital gain.

Is an inherited house exempt?

No, not automatically. The capital gain is calculated from the value declared at the time of inheritance. It may then qualify for the applicable exemptions and allowances depending on the heir's circumstances and the period of ownership.

Can estate agency fees be deducted?

Yes, where they are actually paid by the seller and this is evidenced in the deed and supporting documents.

When does the capital gain start to decrease?

The first allowances are available after five full years of ownership, from the sixth completed year onwards.

Key takeaways

Property capital gains are taxed at 19% for income tax and 17.2% for social security contributions.

However:

• a main home is normally exempt;
• allowances begin after five years;
• income tax no longer applies after 22 years;
• social security contributions no longer apply after 30 years;
• purchase costs and certain works can reduce the capital gain;
• a surcharge may apply where the net taxable capital gain exceeds €50,000;
• SCI subject to corporation tax, professionals and certain furnished rentals are subject to specific rules.

Every transaction has its own specific features. Before making any decision to sell, it remains advisable to check with a notary, accountant or tax lawyer.

Informational article updated in September 2026. It does not constitute personalised tax advice. Rules, thresholds and temporary measures should be checked on the date of sale.