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France Mortgage and Home Ownership Tax Guide

French tax rules for mortgages and home ownership. The guide covers: the tax treatment of mortgage interest — in France, the interest on a mortgage loan for the main residence is NOT deductible from personal income tax (the IR); the former "crédit d'impôt sur les intérêts d'emprunt" (the tax credit on mortgage interest) was abolished in 2011; the interest on a mortgage for a rental property (the "investissement locatif") is deductible from the rental income in the réel regime (the "régime réel" — the interest on the acquisition loan for the rental property is deductible from the revenus fonciers); the interest on a mortgage for the main residence is NOT deductible from any tax; the tax advantages of the main residence — the main residence (the "résidence principale") benefits from several tax advantages: (a) the capital gain on the sale is fully exempt from capital gains tax (the "exonération totale de la plus-value immobilière" — Article 150 U of the CGI), (b) the taxe d'habitation on the main residence is abolished (from 2023), (c) the taxe foncière is still payable (the owner pays the land tax), (d) the IFI (wealth tax) exemption — the main residence is included in the IFI taxable base but with a 30% reduction (the "abattement de 30% sur la résidence principale pour l'IFI"); the property transfer taxes (frais de notaire) — the buyer of an existing property pays approximately 7–8% of the purchase price in transfer taxes (the "droits de mutation" — 5.80% tax plus the notary fees at approximately 0.8–1.0%); the buyer of a new property pays TVA at 20% (included in the price) and lower notary fees (approximately 2–3%); the tax credits for renovation and energy efficiency — (a) the "TVA à taux réduit de 5.5%" (the reduced TVA rate of 5.5% for energy-efficiency works), (b) the "MaPrimeRénov'" (the government grant for energy-efficiency works — not a tax credit but a direct grant), (c) the "éco-prêt à taux zéro" (the zero-interest eco-loan for energy-efficiency works — up to €50,000); the PTZ (Prêt à Taux Zéro) — the zero-interest loan for first-time buyers of a main residence: the PTZ is available for the purchase of a new property or the renovation of an existing property; the loan amount depends on the location and the household income (up to 40% of the purchase price in certain zones); the PTZ is interest-free for 8–12 years; the PTZ is not a tax credit but a soft loan; the mortgage registration tax (taxe de publicité foncière) — the registration of the mortgage (the "inscription hypothécaire") is subject to a registration tax of approximately 0.75% of the mortgage amount; the tax is paid by the borrower at the time of the mortgage registration; the early repayment penalty — the "pénalité de remboursement anticipé" is capped at 3% of the outstanding capital (the "indemnité de remboursement anticipé" — the IRA — is limited by law to 3% of the outstanding loan or 6 months of interest).

France does not allow mortgage interest deductions for the main residence, but the capital gains exemption on the sale of the main residence is a significant advantage. All amounts in Euros (EUR). For related reading, see our Property Tax Guide → and Real Estate Investment Guide →.

Main Residence — Tax Advantages

• Capital gains exemption: The sale of the main residence is fully exempt from capital gains tax (the "exonération de la plus-value"). There is no time limit or condition on the amount. The exemption applies to the gain on the sale of any property that was the taxpayer's main residence at the time of the sale (or at the time of the transfer if the property is sold after the taxpayer has moved out — the taxpayer must have occupied the property until the sale for the full exemption).

Rental Property Mortgage Interest

• Deductible in réel regime: The interest on a loan for the acquisition of a rental property (unfurnished or furnished) is fully deductible from the rental income in the réel regime (the "régime réel"). The interest on the loan for the main residence is NOT deductible.

For the PTZ (zero-interest loan) eligibility, see the Agence Nationale de l'Habitat (ANAH) website. For the reduced TVA rate on energy-efficiency works, see our VAT Guide →.