French property tax updates for 2025 for non-residents

France’s tax landscape in 2025 presents several key considerations for non-resident property owners. From rental income and capital gains to wealth tax and local property levies, understanding the current rules is essential. Below is a concise overview of the most important French tax developments affecting non-resident owners, along with planning strategies to manage these obligations.

Rental Income

• 20% on net income up to €29,315
• 30% on any excess

Deductions

• A standard 30% allowance (for unfurnished rentals under the micro-foncier regime), or
• Itemized deductions for actual expenses such as maintenance, property management, insurance, and taxes.

Social Charges

• Standard rate: 17.2%
• Reduced rate: 7.5% for non‑residents in the EU/EEA/Switzerland/UK: CSG/CRDS don’t apply. If you’re affiliated to a compulsory social security scheme in an EU/EEA country, Switzerland, or the UK, your French‑source rental income or real‑estate capital gains are not subject to CSG (9.2%) or CRDS (0.5%). Instead, you pay only the solidarity levy at 7.5% (not the usual 17.2%).The EU “De Ruyter” line of case law says a person should not fund French social benefits if they’re insured under another Member State’s scheme; France adjusted its rules accordingly.
  
  Acceptable evidence typically includes an A1 certificate (posted workers/affiliation) or an S1 form (healthcare entitlement), or equivalent official attestation from the foreign scheme. French guidance ties the exemption to being affiliated to a foreign compulsory scheme; the 7.5% solidarity levy remains.

Capital Gains Tax

• Standard rate: 19%
• Social charges: 17.2% (or 7.5% for eligible EU/EEA residents – see above)
• High-value gains: 2% to 6% surtax may apply

Taper Relief

• After 5 years, taxable gain is reduced by 6% per year (years 6 to 21)
• Additional 4% reduction in year 22
• Full exemption from capital gains tax after 22 years
• Social charges taper over 30 years, reaching full exemption in year 30

Exemptions

• Recent former residents selling their principal residence
• €150,000 one-time exemption for EU/EEA nationals meeting specific criteria

IFI Wealth Tax

Scope and Rates

• Applies if net French real estate assets exceed €1.3 million
• Rates range from 0.5% to 1.5% on value above €800,000

Deductions

• Properties over €5 million
• Intrafamily or non-commercial loans

2025 Status

Local Property Taxes

Taxe Foncière (Property Ownership Tax)

• Payable annually by all property owners
• Based on cadastral rental value and local rates
• Bills issued in the fall; payment due in October
• No exemptions for non-residents
• Rates have increased substantially in recent years, especially in urban areas

Taxe d’Habitation (Secondary Residence Tax)

• Abolished for primary residences
• Still applies to second homes and vacant properties
• 2025: Over 1,600 communes apply a surtax of 5% to 60%
• Can significantly increase annual tax bills for holiday homes

Occupancy Declarations

• Owners must declare occupancy status via their online tax account
• Updates only required if status changes
• Failure to declare may result in a €150 fine

Planning Strategies

Holding Structures

• Transparent entities (e.g., SCIs) are looked through for IFI purposes
• Opaque entities with real substance may be excluded
• Proper structuring can support inheritance planning and IFI mitigation
• Full disclosure and compliance are essential

Tax Treaties

• Double taxation relief often available
• Declare French-source income in your home country
• Claim any allowable tax credits

Capital Gains Timing

• Plan sales to benefit from taper relief
• Long-term ownership can eliminate CGT and social charges

Leveraging Debt

• Mortgages can reduce IFI taxable base
• Restrictions apply to related-party or non-commercial loans
• Ensure proper documentation

Compliance

• File returns on time
• Keep occupancy declarations up to date
• Monitor regulatory changes to avoid penalties