Capital gains tax on Paris property: calculation, allowances and exemptions

An apartment bought for 350,000 euros in the 10th arrondissement in 2015, resold for 480,000 euros in 2026, generates a gross capital gain of 130,000 euros. After the acquisition price increases, holding period allowances and levies, the final tax comes to around 20,000 to 25,000 euros. This is an amount that surprises many sellers, often discovered at the moment of signing at the notary’s office.

Capital gains taxation is one of the least understood subjects among Parisian property owners. The rules have been stable since 2013, but their practical application, with increases, progressive allowances, surtax and exemption cases, forms a complex layering that few sellers master. Yet a good understanding of these mechanisms can influence the timing of a sale, the choice between main residence and investment, and even the structuring of the initial purchase.

This guide details the full calculation, exemption cases, and legal strategies for optimizing the tax bill.

The step-by-step calculation

The taxable capital gain is calculated in four steps. Each one matters.

Step 1: The gross capital gain

This is the difference between the selling price and the increased acquisition price.

The selling price is the price stated in the authentic deed. It may be reduced by the selling costs you have borne: mandatory diagnostics, mortgage release if applicable. Agency fees are only deductible if they are your responsibility (not the buyer’s).

The acquisition price is the price stated in the purchase deed, increased by two elements.

Acquisition costs: either the actual amount of notary fees paid at purchase (with documentation), or a flat rate of 7.5% of the purchase price. The flat rate is almost always more advantageous because actual notary fees in existing property run around 7.5 to 8%, and the flat rate saves you from having to find the receipts.

Works: either the actual amount of works carried out since purchase (with invoices from companies only, not work done by yourself), or a flat rate of 15% of the purchase price, applicable only if you have held the property for more than 5 years. This 15% flat rate is automatic after 5 years, with no documentation required. It is a significant tax benefit.

Example: Calculating the gross capital gain

Two-room apartment in the 10th, bought for 350,000 euros in 2015, resold for 480,000 euros in 2026 (11 years of ownership)

• Selling price: 480,000 euros

• Selling costs (diagnostics): -800 euros

• Adjusted selling price: 479,200 euros

• Purchase price: 350,000 euros

• Acquisition costs increase (7.5% flat rate): +26,250 euros

• Works increase (15% flat rate, ownership > 5 years): +52,500 euros

• Increased acquisition price: 428,750 euros

• Gross capital gain: 479,200 - 428,750 = 50,450 euros

Note the effect of the increases: the gross capital gain drops from an apparent 130,000 euros to 50,450 euros after applying the flat rates. That is a 61% reduction. The 7.5% and 15% flat rates are powerful mechanisms that should never be overlooked.

Step 2: Allowances for holding period

Progressive allowances apply to the gross capital gain. There are two distinct schedules, one for income tax and one for social levies, because total exemption does not arrive at the same time.

Allowances for income tax (19%):

• 0 to 5 years of ownership: no allowance
• 6th to 21st year: 6% per year
• 22nd year: 4%
• Beyond 22 years: total exemption

Allowances for social levies (17.2%):

• 0 to 5 years: no allowance
• 6th to 21st year: 1.65% per year
• 22nd year: 1.60%
• 23rd to 30th year: 9% per year
• Beyond 30 years: total exemption

Total income tax exemption occurs after 22 years. Total social levies exemption after 30 years. Between 22 and 30 years, you no longer pay income tax but still pay social levies (at a rate heavily reduced by allowances).

Continuing the example: Allowances for 11 years of ownership

Gross capital gain: 50,450 euros

Income tax allowance: 6 full years beyond the 5th (years 6 to 11) x 6% = 36%

• Taxable capital gain for income tax: 50,450 x (1 - 0.36) = 32,288 euros

Social levies allowance: 6 years x 1.65% = 9.90%

• Taxable capital gain for social levies: 50,450 x (1 - 0.099) = 45,455 euros

Step 3: Calculating the tax

Income tax: 32,288 x 19% = 6,135 euros

Social levies: 45,455 x 17.2% = 7,818 euros

Total before surtax: 13,953 euros

Step 4: The surtax on large capital gains

A progressive surtax is added when the net taxable capital gain (after income tax allowance) exceeds 50,000 euros. The scale ranges from 2% (between 50,001 and 60,000 euros) to 6% (above 260,000 euros).

In our example, the taxable capital gain for income tax is 32,288 euros, below the 50,000 euro threshold, so no surtax applies. But on more expensive properties or larger capital gains, the surtax can represent several thousand euros.

Surtax example: Property bought for 600,000 euros, resold for 900,000 euros after 8 years

• Gross capital gain (after 7.5% + 15% increases): 900,000 - 600,000 x 1.225 = 165,000 euros
• Income tax allowance (3 years beyond the 5th x 6%): 18% > Taxable capital gain for income tax: 135,300 euros
• Surtax applicable (net gain > 50,000 euros): progressive scale
• Estimated surtax amount: approximately 5,600 euros

On premium Parisian properties in the 7th, 8th, and 16th, where prices regularly exceed one million euros, the surtax can reach 10,000 to 20,000 euros. It is a line item not to be neglected in the resale calculation.

Cases of total exemption

Several situations allow you to escape capital gains tax entirely.

Main residence

This is the best-known and most powerful exemption. The resale of your main residence is totally exempt from capital gains tax, regardless of the gain amount and holding period. An apartment bought for 300,000 euros and resold for 600,000 euros three years later: zero tax if it is your main residence.

The conditions are strict: the property must be your effective, habitual and actual main residence on the day of sale. The tax authorities check the address on your tax return, your energy bills, your electoral roll registration. A rental investment or secondary residence cannot be reclassified as a main residence to escape tax. This is one of the most common tax audits in real estate.

Moving out before selling: if you have left the property to move into your new home before selling the former one, the exemption is maintained provided the sale occurs within a “normal” timeframe (case law generally accepts one year, possibly more if you can demonstrate active sale efforts). Beyond that, the risk of reclassification exists.

Long holding period

Total income tax exemption after 22 years of ownership. Total social levies exemption after 30 years. This is mechanical: the progressive allowances end up covering 100% of the capital gain. In practice, few Parisian owners wait 30 years to sell. But those who have inherited a family property held for decades often benefit from this exemption.

First sale of a property other than the main residence

Total exemption (income tax + social levies) if you meet three cumulative conditions: you have not owned your main residence in the four years preceding the sale, you have not already benefited from this exemption, and you reinvest the sale proceeds in acquiring your main residence within 24 months.

This is a little-known but valuable exemption for Parisian tenants selling a rental investment to buy their main residence. If you are in this situation, consult your notary. The conditions are strict but the savings can be considerable.

Sales below 15,000 euros

Exemption if the selling price is below 15,000 euros (or 15,000 euros per share of each seller in the case of co-ownership). Not applicable in Paris for a dwelling, but applicable for cellars or parking spaces sold separately.

Compulsory purchases and sales to the State

Exemption if you reinvest 90% of the price within 12 months in acquiring real estate. A marginal case, but it exists.

Legal optimization strategies

Maximizing the increased acquisition price

The first optimization is to inflate the acquisition price as much as possible. The 7.5% (costs) and 15% (works after 5 years) flat rates apply automatically. But if you have carried out significant works with company invoices (not work done by yourself), the actual amount may exceed the 15% flat rate. In that case, opt for actual costs.

Deductible works include: construction, reconstruction, extension, improvement (new kitchen, new bathroom, window replacement, electrical rewiring). Maintenance and repair works are not deductible, unless they are inseparable from improvement works.

Keep your invoices. An investor who renovated a Haussmannian apartment for 80,000 euros eight years ago reduces their taxable capital gain by the same amount, saving 15,000 to 25,000 euros in tax.

Choosing the right time to sell

Progressive allowances create thresholds. Each year of ownership beyond the 5th reduces the taxable capital gain by 6% for income tax. Selling in December of year N rather than January of year N+1 means one fewer year of allowance, potentially several thousand euros in difference.

The most significant threshold is the 22nd year: total income tax exemption. If you have held a property for 20 or 21 years, waiting one or two years to cross this threshold can save tens of thousands of euros in income tax. Social levies remain due until 30 years, but at a rate heavily reduced by allowances.

Selling your main residence rather than your investment

If you own two properties in Paris, your main residence and a rental investment, and need to sell one, the tax calculation is clear. The main residence is exempt. The investment is taxed. If both properties are of comparable value, sell the main residence and move into the investment (which then becomes your new main residence for a future tax-exempt resale).

This strategy is perfectly legal but requires rigorous planning, particularly regarding the timeframe for relocation and proof of effective residence in the new property.

Jean Mascla’s advice: Capital gains tax is the subject our clients understand least. Many discover the tax amount at the moment of signing at the notary’s office, which is too late to optimize anything. If you are considering selling an investment or secondary residence in Paris, have your notary simulate the capital gain at least 6 months before listing. You can then decide on the best timing and the best strategy.

Summary table: tax by holding period

For a property with a gross capital gain (after increases) of 100,000 euros, here is the total tax by holding period.

Holding period	Income tax allowance	Social levies allowance	Income tax	Social levies	Total tax	Effective rate
5 years	0%	0%	19,000 euros	17,200 euros	36,200 euros	36.2%
8 years	18%	4.95%	15,580 euros	16,348 euros	31,928 euros	31.9%
10 years	30%	8.25%	13,300 euros	15,782 euros	29,082 euros	29.1%
12 years	42%	11.55%	11,020 euros	15,216 euros	26,236 euros	26.2%
15 years	60%	16.50%	7,600 euros	14,364 euros	21,964 euros	22.0%
20 years	90%	24.75%	1,900 euros	12,944 euros	14,844 euros	14.8%
22 years	100%	28.05%	0 euros	12,375 euros	12,375 euros	12.4%
25 years	100%	55.05%	0 euros	7,731 euros	7,731 euros	7.7%
30 years	100%	100%	0 euros	0 euros	0 euros	0%

The effective rate drops from 36.2% at 5 years to 22% at 15 years and zero at 30 years. Each year of ownership reduces the bill, but the first years after the 5th are the most impactful (6 percentage points of income tax allowance per year).

Capital gains in an SCI (French property company)

The regime depends on the SCI’s tax election.

SCI subject to income tax (transparent): the individual capital gains regime applies, exactly as with direct ownership. Holding period allowances, exemption after 22 years (income tax) and 30 years (social levies). The same calculation as detailed above.

SCI subject to corporate tax: the regime changes radically. The capital gain is calculated on the net book value (purchase price less depreciation taken). After 15 years of depreciation, the book value can be very low, which artificially inflates the taxable capital gain. No holding period allowance. Taxation at the corporate tax rate (15% then 25%). And if the partners want to recover the funds, distributed dividends are taxed again (30% flat tax). For the detail of this mechanism, see our guide to SCI for buying in Paris.

LMNP (furnished rental): the capital gain falls under the individual regime, even though the property is depreciated for accounting purposes, the capital gain is calculated on the initial purchase price (not on the net book value). This is one of the great advantages of LMNP over SCI subject to corporate tax: depreciation reduces income tax without increasing capital gains tax. Full details in our LMNP tax guide.

Key takeaways

Capital gains tax on Paris property is a predictable and optimizable tax, provided you plan ahead.

The two acquisition price increases (7.5% flat rate for costs + 15% flat rate for works after 5 years) reduce the gross capital gain by more than 20%. Holding period allowances reduce it further progressively until total exemption (22 years for income tax, 30 years for social levies). The main residence is totally exempt: this is the most powerful tax advantage in French real estate.

For a rental investment or secondary residence in Paris, the effective tax rate on capital gains drops from 36% at 5 years to 22% at 15 years. Each additional year of ownership beyond the 5th saves approximately 1,000 to 3,000 euros in tax on a 100,000 euro capital gain. The timing of the sale is a real optimization lever.

Considering selling a property in Paris and reinvesting? Talk to Home Select. Our 16 property hunters assist with both selling and repurchasing, and our clients benefit from the expertise of partner notaries to optimize capital gains taxation. First consultation free, fees 100% on success.