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Navigating French Taxation for Foreign Buyers of Luxury Real Estate on the French Riviera

Acquisition Fees and Notary Charges

Whether you are acquiring a luxury home in Les Parcs de Saint-Tropez or a penthouse on Cannes’ La Croisette, it involves certain mandatory costs known as notary fees or acquisition fees. For properties considered "bien ancien" — those built more than five years ago — these fees typically range from 7% to 8% of the purchase price, which includes approximately 5.80% in registration duties. On the other hand, "bien neuf" properties, or those constructed within the last five years, and properties sold off-plan (VEFA) attract fees of about 2% to 3%, plus a 20% VAT.

Income Tax on Rental Earnings

If you're planning to generate rental income from your luxury villa with a sea view, be prepared to declare all earnings to the French authorities. For non-residents, the starting tax rate is 20%, with an additional 17.2% in social levies. However, EU residents might qualify for reduced levies depending on their home country's tax treaty with France.

Local Taxes

As a property owner on the French Riviera, you will be subject to local taxes such as the housing tax applicable to second homes and the property tax. These taxes are due regardless of whether the owner occupies the property or not.

Real Estate Wealth Tax (IFI)

The IFI, or Impôt sur la Fortune Immobilière, is a wealth tax that targets the real estate assets of high-value property owners. This tax kicks in once your property holdings in France exceed a net value of €1.3 million, with rates progressing from 0.5% to 1.5%.

Professional Advice Is Key

Given the complexity and potential financial implications of these taxes, consulting with experienced tax professionals is highly recommended. Specialists in French real estate taxation can provide invaluable advice, ensuring compliance and optimizing the financial aspects of your investment.

May 28, 2024

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