Main tax issues when investing in real estate in France
Stanislas VAILHEN et William MATHIOTTE
France is one of the largest investment markets in continental Europe. Acquiring a French real estate property in France raises many tax issues which must be handled with care to avoid any unnecessary tax exposure.
Therefore, the structuring of the real estate investment should be made notably in light of the use of the property (i.e. secondary home, rental business…) and the related tax considerations since the owner will be taxable on acquiring, renting, selling and transferring the property.
This, various issues may arise such as:
- VAT on works and repairs;
- Registration duties (on acquiring);
- Wealth tax (on individuals) and 3% tax on fair market value (on corporate vehicles);
- Income tax (on use and renting) and capital gains tax (upon resale);
- Gift tax and inheritance tax.
Since the tax system is complex, it is generally recommended to seek advice with a professional before investing to optimise the structure of your investment.