Do you own a second home in France or want to buy a vacation home in France? Then you need to consider a number of financial and tax consequences. An overview.

Taxe sur la plus-value

If you sell your second home in France at a profit, you have to pay ‘taxe sur la plus-value’. This is a tax on the sale profit. That selling profit is the difference between the purchase price and the selling price. You can add certain costs to the purchase price, such as purchase costs and renovation costs. From the selling price you can deduct certain costs, such as brokerage costs.

Income tax

Residents of an EU country selling their second home in France pay 19% income tax on the adjusted sales profit. For a profit of 50,000 euros to 100,00 euros, you have to pay an additional tax of 2 percent. If the gain exceeds 100,000 euros, the rate rises to a maximum of 6 percent (for gains of 250,000 euros or more).

Social contributions on sale profits

In addition to income tax, you also pay social contributions on the sale profits from the second home in France. The legislation around this has recently changed. As a result, people who are socially insured in another EU member state no longer have to pay the normal rate of 17.2 percent, but only a “solidarity contribution” of 7.5 percent on the sale gain.

Lower contributions after a long time

The longer you own your second home in France, the smaller the amount on which you have to pay income tax and social contributions becomes. Each year, this amount decreases by a certain percentage, until the tax base finally reaches zero, meaning you have to pay nothing more. The tax base for income tax decreases faster (22 years to zero) than that for social contributions (30 years to zero).