Capital Gains Tax in France: 22-Year Exemption, Allowances, and a Practical Guide for Foreign Investors

Introduction

When selling an apartment or villa in France, one of the most confusing topics is capital gains tax, known as plus-value. Although its closest equivalent in Turkish would be capital gains tax, the French system is more technical in its own way. The difference between the sale price and the purchase cost is not taxed directly; acquisition costs, renovation items, holding period, and the type of property being sold can all significantly change the outcome.

This is especially important in Côte d’Azur markets such as Nice, Cannes, Antibes, Villefranche-sur-Mer, and Beaulieu-sur-Mer, where price appreciation has been strong over the past 10 years, so foreign investors should think about their exit plan at the time of purchase. An apartment bought near the Promenade des Anglais in 2013 and an apartment in Cimiez held since 2001 will not produce the same tax result. The key distinction is this: in France, a primary residence is generally exempt from capital gains tax, but second homes, investment apartments, and rental properties are usually taxable.

In this article, we explain how capital gains tax works in France, what the 22-year exemption actually means, how the allowance schedule operates, and the most common scenarios for foreign investors, in a way that stays simple while remaining technically accurate.

What exactly is capital gains tax?

In France, the taxable element in a real estate sale is the net gain from the sale. The basic formula is simple: the adjusted purchase cost is subtracted from the sale price. However, both the sale price and the purchase cost are adjusted by certain items. notaire fees, some acquisition expenses, renovation costs under certain conditions, and the holding period all matter in this calculation.

In practice today, we speak of two separate charges: first, the capital gains tax itself, which is treated like income tax, and second, social charges. Broadly speaking, the capital gains tax rate is 19%. In addition, social charges are generally 17.2% in most cases. So if there is no reduction due to the holding period, the total burden often comes close to 36.2%.

If the gain is high, an additional tax may also apply. When the taxable net capital gain exceeds certain thresholds, an extra surtaxe ranging from 2% to 6% may be charged. This extra burden is often overlooked, especially when selling a pied-à-terre in Nice Carré d’Or that was bought years ago and has appreciated strongly.

The critical point here is that the tax is usually calculated and collected by the notaire at the time of the sale. In other words, this is not a theoretical issue to declare later; the figures should be reviewed in advance during the compromis de vente and acte de vente stages. For foreign investors, the safest approach is to estimate the approximate net sale proceeds before listing the property.

In which cases does the tax apply, and when is there an exemption?

The best-known exemption is the sale of a primary residence. If, on the date of the sale, the property is genuinely your main home, capital gains tax usually does not apply. However, showing only an electricity bill is not enough; actual occupancy, tax address, and the way the property is used are assessed together. Trying to present a Riviera apartment as a primary residence at the last minute, when you do not spend most of the year in France, generally does not create a defensible position.

Second homes, holiday apartments, seasonally rented apartments, and long-term rental investment properties are generally taxable. This is the most common scenario foreign investors face. A studio in Nice Port used for short-term rentals, a sea-view holiday apartment in Antibes, or a flat in Cannes generating strong income during the festival period will all be subject to a capital gains calculation upon sale.

There are also some special exemptions. For example, exceptions may apply if the sale price is below certain low thresholds, or if the seller meets specific conditions related to old age or living in a care home. In addition, some non-French tax residents may have limited exemption options when selling a property they previously used as a primary residence in France. However, these are technical areas that vary from one case to another, so relying on general assumptions is risky.

In practice, the main question for foreign owners is this: is the property in France an investment, a second home, or truly a primary residence? The tax outcome largely begins with this classification.

What does the 22-year exemption mean? Why is 30 years also important?

A common phrase in the market is: “In France, capital gains tax ends after 22 years.” This statement is partly true, but incomplete. After 22 years, there is a full exemption from the 19% capital gains tax component that functions like income tax. In other words, that part falls to zero.

However, the timeline is longer for social charges. Full exemption from the 17.2% social charges applies only after 30 years of ownership. So if you sell a property between year 22 and year 30, there may be no capital gains tax in the income tax sense, but part of the social charges may still remain due.

This distinction is especially important for older Côte d’Azur properties. For example, if an apartment in Nice bought in 2002 is sold in 2026, the exemption for the income tax portion will most likely be complete, but the social charges may not yet have fully ended. By contrast, if an apartment in Menton bought in 1995 is sold today, full exemption may apply for both capital gains tax and social charges.

For investors, the conclusion is clear: delaying a sale by one or two years can sometimes make a difference of tens of thousands of euros. Especially for a property that has appreciated substantially, the gap between year 21 and year 22, or between year 29 and year 30, is not just a technical detail; it directly affects your net cash outcome.

How does the allowance schedule work? Rates based on holding period

In France, the allowance applied to capital gains depends progressively on the holding period. For the capital gains tax portion, the system generally works as follows: there is no allowance before 5 full years. From year 6 to year 21, a 6% allowance applies for each year. In year 22, an additional 4% allowance applies, bringing the total allowance to 100%.

For social charges, the schedule is slower. Again, there is no allowance during the first 5 years. From year 6 to year 21, an allowance of about 1.65% applies each year. In year 22, there is only a very limited additional allowance. From year 23 to year 30, a 9% annual allowance applies, reaching full exemption in year 30.

Let’s think of this with a simple example. Suppose an apartment was bought in 2014 for €300,000 and will be sold in 2026 for €500,000. The gross gain appears to be €200,000. But first, notaire fees, eligible acquisition costs, and any acceptable renovation works are added, which reduces the taxable gain. Then the allowance is applied based on a 12-year holding period. As a result, the taxable base may not be the initially visible €200,000.

There is another important detail here: if the property has been held for a long time and there are no actual renovation invoices, it may be possible under certain conditions to apply a flat-rate renovation amount to the purchase price. Especially in older Nice buildings, lift replacement, roof contributions, façade repairs, or interior renovations can significantly reduce the tax base if properly documented. However, furniture, decoration, or movable equipment purchased for rentals are not treated in the same way.

Which items are taken into account in the calculation? The most common mistakes foreign investors make

If the items that can be added to the purchase cost are not used correctly, an investor may pay more tax than necessary. notaire duties and fees paid at the time of purchase may be taken into account either at their actual amount or, in some cases, by using a flat-rate method. In addition, certain construction and improvement works may be added to the purchase cost if the invoices and conditions are acceptable.

The most common mistake is to assume that every expense qualifies as renovation. For example, a sofa, appliances, or decorative lighting bought for a short-term rental apartment in Nice will usually not be considered structural work deductible from the capital gains tax base. By contrast, rewiring the electrical installation, fully rebuilding a bathroom, replacing window frames, or contributions toward renovation of common areas may lead to a different result.

Another mistake is assuming that the sale price will always be taxed based on the gross figure shown on the title deed. In fact, some costs directly linked to the sale may also be deductible. The notaire and accounting team will assess these based on the file. This becomes particularly important in high-commission luxury sales, where it matters which cost is borne by the seller.

Another issue foreign investors should pay attention to is exchange rates. Capital gains tax in France is calculated in euros. You may personally feel you bought the property with a different cost basis in dollars or Turkish lira, but the French tax system looks at the euro figures. For this reason, your personal feeling that “I didn’t actually make that much” may not match the tax calculation.

In addition, ownership structures such as SCI, indivision, and usufruit-bare ownership can also change the outcome. The sale of an apartment in Villefranche held through a family co-ownership structure requires different documents and analysis than a studio in Nice registered under a single owner.

Practical scenarios: examples from Nice and the Côte d’Azur

Scenario 1: A one-bedroom apartment in Nice Musiciens bought in 2018 for €420,000 and to be sold in 2026 for €610,000. The property was used as a second home and is not a primary residence. Because the holding period is short, the allowance remains limited. If there are no substantial structural renovation invoices, the tax burden will be noticeable. A net proceeds simulation before the sale is essential.

Scenario 2: A holiday apartment in Antibes bought in 2003 for €280,000 and sold today for €760,000. Here, the 22-year threshold may have been reached or exceeded. A very substantial reduction, or even full exemption, may apply to the capital gains tax portion. However, if 30 years have not yet passed, social charges may not be fully eliminated. Even so, the tax burden is dramatically lower than in a file involving a 2018 purchase.

Scenario 3: An apartment in Menton held since 1996 is being put on the market. Since the 30-year threshold is almost completed or already completed, the likelihood of full exemption from both capital gains tax and social charges is very high. In files like this, the main issue is often not tax, but inheritance planning and sale timing.

Scenario 4: An apartment in Cannes was operated profitably as a short-term rental, but the owner did not properly keep most of the invoices. In this case, the impact of past renovations on the tax base may remain limited. On paper, the gain appears higher than expected and the tax increases. In France, especially for foreign owners, document discipline is as important as the tax itself.

Scenario 5: The owner lived in a property in Nice for a few years, but it later became a second home. If it is no longer a primary residence at the time of sale, having lived there in the past does not automatically create an exemption. What matters is the property’s status and use on the relevant dates.

Conclusion

In France, capital gains tax is not simply the “difference between purchase and sale.” The end of the income tax portion after 22 years is a major advantage, but the 30-year threshold must also be considered separately for social charges. To see the true picture, acquisition costs, renovation invoices, the property’s use, and the date of sale must all be assessed together.

Because value appreciation has been high in Nice and across the Côte d’Azur, it is always wise to prepare an initial estimate before waiting for the official calculation from the notaire. For foreign investors in particular, the primary residence exemption, second-home status, high-gain surtaxe, and missing documentation can all seriously change the outcome of the file.

At Velmira Living, with our Nice-based team, we help clarify the pre-sale tax framework in real estate transactions handled in French and Turkish. If you are thinking about selling your property or planning an exit in the coming years, we can review your file together calmly and clearly.