Owning a second home in France: the taxes most people miss

France is among the most popular destinations for overseas property ownership and one of the most fiscally demanding. Non-resident owners face several layers of taxation that are not always apparent at the point of purchase, and the interaction between French tax and home-country obligations is frequently misunderstood.

Rental income

Non-resident rental income is taxed at 20% income tax plus social charges of 17.2%, giving a combined rate of 37.2%. Social charges are not income taxes. In many countries, only income tax qualifies for foreign tax credit relief. Social charges may therefore represent an irrecoverable additional cost with no offset available in the home country.

Annual rental income below €15,000 may be declared under the simplified micro-foncier regime, which applies a flat 30% deduction in lieu of actual expenses. Above €15,000, the réel regime applies, with actual expenses deducted and, for mixed personal and rental use, a time-based apportionment required.

Properties not formally let

France imputes a notional income on second homes during periods when they are not formally let. Owners are treated as receiving a benefit from the property even when it is unoccupied, and a return is required.

Capital gains on disposal

CGT of 19% plus social charges of 17.2% gives a combined rate of 36.2%. A time-based abatement reduces the income tax element from year six of ownership, with full exemption at year twenty-two. Social charges follow a longer abatement schedule, reaching full exemption at year thirty. The main residence is fully exempt.

Succession and inheritance

French droits de succession apply to French-sited property regardless of where the owner was living. Rates range from 5 to 45% for direct heirs and up to 60% for unrelated beneficiaries. Each direct heir receives a €100,000 allowance. The assurance vie structure is the principal mitigation tool: assets held within it fall outside the taxable estate.