Tax Benefits For Real Estate Investors In France

Published on October 4, 2025 and written by Cyril Jarnias

Real estate investment in France remains an attractive option for many investors, both domestic and international. This appeal is largely due to a tax system that, although complex, offers numerous benefits and tax optimization opportunities. In this article, we will explore in detail the various aspects of French real estate taxation and how investors can benefit from them.

Advantageous Local Taxation: Keys to Optimizing Your Investment

Local taxation in France plays a crucial role in the attractiveness of real estate investment. It mainly consists of two taxes: the property tax and the residence tax. In recent years, significant changes have been made to these taxes, offering new opportunities for savvy investors.

The property tax, paid by property owners, is calculated based on the cadastral rental value of the property. This tax varies considerably from one municipality to another, which can influence the choice of your investment location. Therefore, it is crucial to thoroughly research the rates applied in different areas before getting started.

Regarding the residence tax, good news for investors: it has been gradually eliminated for primary residences. However, it remains due for secondary residences and vacant properties, which can impact investment strategy, particularly in tourist areas.

An important point to note is the possibility for certain municipalities to apply a surcharge on the residence tax for secondary residences, which can go up to 60% in high-demand areas. This measure aims to encourage owners to rent out their properties long-term rather than keeping them as secondary residences or renting them short-term.

For investors who choose furnished rentals, the tax regime can be particularly advantageous. The Non-Professional Furnished Landlord (LMNP) status allows for a standard 50% deduction on rental income (up to €77,700 in annual revenue), which can significantly reduce taxation.

International Taxation: An Asset for Foreign Investors

For foreign investors, France has established an extensive network of tax treaties aimed at avoiding double taxation. These agreements are a real asset, allowing for the optimization of cross-border real estate investment taxation.

France has signed tax treaties with over 120 countries, covering a large part of the globe. These treaties determine which country has the right to tax real estate income and capital gains. Generally, it is the country where the property is located that has the right to tax this income.

For non-residents investing in France, the tax rate on rental income is set at 20% up to €27,519 of taxable net income, and 30% beyond that. This rate can be advantageous compared to some investors’ home countries.

Regarding real estate capital gains, non-residents are subject to a rate of 19%, plus social contributions of 17.2%. However, a holding period allowance allows for a significant reduction in this taxation. After 22 years of ownership, the exemption is total for income tax, and after 30 years for social contributions.

An important point to emphasize is the possibility for residents of the European Union, Iceland, and Norway to benefit from the same tax advantages as French residents. This notably includes the possibility of deducting certain expenses from rental income.

For investors outside the EU, it is possible to appoint a tax representative in France. This representative can facilitate administrative and tax procedures and help optimize the investment’s taxation.

Property Tax and Residence Tax: What You Need to Know for Peaceful Investing

The property tax and residence tax are two local taxes that directly impact the profitability of a real estate investment in France. Understanding how they work is essential for any investor wishing to optimize their tax strategy.

The property tax is due by the property owner, whether they occupy it or not. Its amount is calculated based on the cadastral rental value of the property, multiplied by the rates set by local authorities. It is important to note that these rates can vary considerably from one municipality to another, sometimes ranging from single to triple.

In 2025, local authorities have the possibility to increase property taxes, particularly in high-demand areas. This measure aims to better distribute the tax burden between regions, but it can significantly impact costs for investors. For example, major cities like Paris or Lyon could see their property tax increase.

Regarding the residence tax, it was gradually eliminated for primary residences between 2018 and 2023. However, it remains due for secondary residences and vacant properties. In some high-demand areas, municipalities have the possibility to apply a surcharge of up to 60% on this tax for secondary residences.

For investors, it is crucial to take these taxes into account when calculating their investment’s profitability. For example, a property purchased for €200,000 in a large city could be subject to an annual property tax of €1,500 to €2,000, which represents a significant expense to include in financial projections.

However, there are cases of exemption or reduction of these taxes. For example, new buildings benefit from a property tax exemption for the two years following their completion. Similarly, certain rental investment schemes like Pinel can offer tax reductions that partially offset these charges.

France Compared to Its European Neighbors: A Competitive Real Estate Taxation?

When comparing French real estate taxation to that of other European countries, we see that each system has its particularities. France stands out with an overall advantageous taxation, especially for non-residents, although some aspects may seem more restrictive.

Take Spain, for example, a country favored by real estate investors. Spanish taxation is generally considered more attractive than that of France, particularly for non-residents and expatriate retirees.

Here is a comparative table of some tax aspects between France and Spain:

• Property tax: In France, it is high and rising, while in Spain, it is lower depending on the region (IBI)
• Residence tax: Eliminated in France in 2023 for primary residences, it is non-existent in Spain
• Tax on rental income: Up to 45% in France, compared to 19% for EU residents and 24% for others in Spain
• Real estate capital gains: Taxed up to 36.2% in France, compared to 19% to 23% in Spain

However, France offers unique advantages. For example, the Pinel scheme, although being phased out, still allows investors to benefit from significant tax reductions. For a 12-year rental commitment, the tax reduction can reach 14% of the investment amount, spread over the commitment period.

Moreover, France has an extensive network of tax treaties, which can be a major asset for international investors. These treaties avoid double taxation and provide a clear and secure tax framework.

It is also important to note that France abolished the Wealth Tax on Real Estate (IFI) in 2018, replaced by the Real Estate Wealth Tax, which only concerns real estate assets. This measure has made real estate investment in France more attractive for large estates.

Finally, France’s political and economic stability, as well as the strength of its real estate market, are factors that largely compensate for a taxation sometimes perceived as heavier. The French real estate market is considered one of the safest in Europe, offering interesting long-term capital gains prospects.

Conclusion: France, Fertile Ground for Real Estate Investment

In conclusion, French real estate taxation offers a complex but potentially very advantageous framework for savvy investors. Between tax optimization schemes, international tax treaties, and market stability, France remains a prime destination for real estate investment.

Recent tax developments, particularly the elimination of the residence tax for primary residences and adjustments to property taxes, have changed the tax landscape. These changes require in-depth analysis and a well-thought-out strategy to optimize investment profitability.

For foreign investors, France offers a particularly attractive framework thanks to its extensive network of tax treaties and the possibility for EU residents to benefit from the same tax advantages as French residents.

It is crucial to remember that each investment is unique and that taxation is only one aspect among others to consider. The property’s location, its capital gains potential, construction quality, and local market prospects are all factors that influence the success of a real estate investment.

Finally, the complexity of French real estate taxation underscores the importance of surrounding oneself with competent professionals. A tax advisor specialized in real estate can make the difference between a profitable investment and a missed opportunity.