Main Residence: Capital Gains Tax Exemption on Sale

Capital Gains Exemption: General Rule

In principle, capital gains on real estate sales are subject to:

• income tax at a flat rate of 19%,

• and social contributions at 17.2%.

However, progressive allowances apply depending on the holding period, leading to full tax exemption after 22 years and social contribution exemption after 30 years.

An important exception applies to the main residence: capital gains are fully exempt, regardless of how long the property has been owned. This rule applies to luxury apartments in Paris, as well as high-end main residences in France and abroad.

Reasonable Sale Period and Exceptional Situations

The sale must occur within a reasonable timeframe, assessed on a case-by-case basis depending on market conditions, price, property characteristics and selling efforts. While tax authorities generally consider one year as reasonable, courts may accept longer delays.

Sale After a Property Loss or Damage

When a main residence becomes uninhabitable due to a disaster such as a fire, capital gains exemption may still apply—even if the property remains vacant for several years—provided reconstruction is carried out promptly and the sale takes place shortly after completion.

Exceptional Capital Gains Allowance Until 2023

An exceptional allowance of 70% (or 85%) applies when selling a property intended for demolition and reconstruction of collective housing, subject to strict conditions and deadlines.