French property tax for foreigners: what international buyers need to know

France continues to attract international buyers looking for secure investments in prime real estate. Whether it’s a holiday home in the South of France, a rental property in Paris, or a long-term diversification strategy, non-residents acquiring French property must understand the legal and tax implications.

Contrary to popular belief, owning property in France as a non-resident does not trigger automatic tax residence. However, it does expose the investor to several French tax regimes — including income tax, capital gains tax, and the real estate wealth tax (IFI) — which are often misunderstood and poorly anticipated. With proper planning and structuring, these tax burdens can be managed or substantially reduced.

Who qualifies as a non-resident under French tax law?

For French tax purposes, an individual is considered non-resident if none of the following criteria are met:

• Their main home (domicile fiscal) is not in France;

• They do not spend more than 183 days per year in France;

• Their principal professional activity is not exercised in France;

• The center of their economic interests is outside France.

This means that simply owning a property in France — even a luxurious one — does not make you a tax resident, as long as your life, family, and financial interests remain abroad.

Nonetheless, the ownership of French property triggers specific tax obligations, irrespective of your country of residence.

Taxation of rental income in France for non-residents

If you rent out your French property, the rental income is always taxable in France — even if you are already taxed on worldwide income in your home country. This applies to both furnished and unfurnished rentals.

For unfurnished property (location nue)

The net rental income is taxed under the category “revenus fonciers” at a flat minimum rate of 20%, unless you are a resident of an EEA country (in which case a progressive scale may apply). Social contributions (17.2%) may also apply, but under certain conditions non-residents from the EU, UK or Switzerland may be partially exempt.

Expenses such as mortgage interest, insurance, repairs and maintenance are deductible from gross rental income. If the property generates a deficit, it can generally be carried forward for ten years.

For furnished property (location meublée)

Income is taxed under the “BIC” regime (industrial and commercial profits), either under a simplified micro-regime (flat 50% deduction) or a real regime allowing full deduction of charges and depreciation. This may offer significant tax deferral or reduction opportunities for structured investments.

Capital gains tax on property sales

When a non-resident sells French real estate, a capital gains tax (CGT) is applied in France, regardless of where the seller lives. The standard CGT rate is 19%, plus 17.2% in social contributions, leading to a combined rate of 36.2%. However, various exemptions, deductions, and reliefs apply:

• A tapering relief (abattement) applies after 5 years of ownership, and the capital gain is fully exempt from CGT after 22 years, and from social contributions after 30 years.

• If you are a resident of the EU/EEA or UK, no additional withholding is levied. If you are a non-EU resident (e.g., UAE, US), a withholding tax applies unless a tax treaty provides otherwise.

• Under certain conditions, your first sale of a French property — even as a non-resident — may be exempt from CGT up to €150,000, if you were formerly tax resident in France.

These rules often require the appointment of a French tax representative (représentant fiscal) in case of sale by non-residents.

French wealth tax (IFI): a critical issue for property owners

Since 2018, France has replaced its general wealth tax (ISF) with a real estate-based wealth tax (IFI — Impôt sur la Fortune Immobilière). This tax applies only to real estate assets, and only on the portion located in France for non-residents.

Non-residents are subject to IFI if the net value of their real estate assets located in France exceeds €1.3 million as of January 1st of each year.

Important features:

• Only real estate is taxable. Shares in foreign companies, securities or other financial assets are not.

• If the French property is held through a company (e.g., SCI, SARL, or foreign structure), the underlying real estate may still be taxable — depending on the transparency of the structure.

• A deduction of debts (such as mortgage loans) is allowed, but anti-abuse rules limit excessive leverage.

IFI rates range from 0.5% to 1.5%, on a progressive scale. This tax is self-assessed and must be reported each year.

Should you buy in your name or through a company?

There are several options for structuring the acquisition of French property, each with its own tax and legal consequences. Common structures include:

• Direct ownership in personal name, simple but exposes the owner directly to French inheritance tax and IFI;

• Société Civile Immobilière (SCI), a French real estate company often used to manage ownership and succession;

• SAS or SARL, used when the property is rented out and profits are to be taxed under corporate rules;

• Foreign companies, which may be tax-transparent or opaque, depending on local and French tax treatment.

For high-value real estate, the use of a company can offer estate planning, tax deferral, or asset protection advantages — but also creates reporting and legal obligations.

Estate planning and inheritance tax considerations

French inheritance tax applies to all real estate located in France, even if the heirs and the deceased are non-residents. Tax rates depend on the relationship and can reach 60% in the absence of close kinship.

However, France has estate tax treaties with certain countries (e.g., Italy, Switzerland, Sweden, US), which may reduce or eliminate double taxation.

Using a French company to hold property, combined with gifting bare ownership (nue-propriété), can mitigate inheritance tax and allow efficient intergenerational transfers. The Dutreil regime may apply when property is used in a business context.

Conclusion: France remains attractive — but requires smart structuring

For non-resident investors, French real estate offers security, prestige and long-term value — but also triggers multiple tax regimes. Without proper structuring, investors may face unexpected tax costs, compliance burdens, or inheritance complications.

At Qualifisc, we help international clients structure their real estate ownership in France in a tax-efficient and legally sound manner — whether through private ownership, companies, or succession vehicles.

If you are considering acquiring property in France, or already own real estate and wish to review your structure, our team can assist you step-by-step, in English or French, with full confidentiality.

Contact us today for a strategic review of your real estate investments in France.