Are you wondering how much tax and social charges you will have to pay when selling your holiday home? Should you sell now or wait in order to reduce the taxation on the capital gain from your secondary residence?
In this article, we explain in detail the concept of capital gains on a secondary residence and how taxable capital gains are calculated. We also cover property capital gains taxation: allowances, social contributions, tax rates, and recent reforms, to help you make an informed decision.
For any sale or purchase project, contact your local Capifrance real estate advisor, who will support you in preparing and successfully completing your project.
Understanding capital gains on a secondary residence: definition and legal framework
A property capital gain is the difference between the sale price and the acquisition price of a property.
The purchase price is increased by eligible costs and works approved by the tax authorities.
The gross value realized at the time of sale serves as the starting point.
Eligible expenses are then deducted to determine the taxable value subject to taxation.
From a tax perspective, a secondary residence is not the owner’s habitual and effective residence.
It generally refers to a property occupied for less than eight months per year or used as a holiday home.
The main residence benefits from a full exemption from capital gains tax, which does not apply to secondary residences.
The applicable tax regime for 2024–2026 provides for a total nominal rate of 36.2%: 19% income tax and 17.2% social contributions.
An additional progressive surtax may apply to high capital gains, depending on thresholds set by the tax authorities.
Calculating taxable capital gains is essential to determining the tax bill.
It affects income tax reporting and the amount of income tax and social contributions due.
For official rules and tax scales, refer to the Ministry of Finance and public service website:
service-public.fr – Property capital gains.
What is capital gain on a secondary residence?
A property capital gain is the profit realized when a property is sold at a higher price than its purchase price.
The acquisition price is increased by purchase-related costs (notary fees, agency commissions, duties).
Eligible renovation or improvement works are also added under conditions set by the tax authorities.
The gross capital gain is calculated by subtracting this total from the sale price.
Capital gains on secondary residences are, in principle, taxable.
The declaration and supporting documents are submitted at the time of sale through the notary.
Unlike a primary residence, a secondary residence does not benefit from automatic exemption, except in specific cases provided by law.
Tax rules applicable in 2026: rates, allowances and social contributions
The overall nominal tax rate is 36.2%: 19% income tax and 17.2% social contributions.
Allowances based on the holding period apply and reduce the taxable base.
For income tax purposes, the allowance is 6% per year from the 6th to the 21st year of ownership.
The 22nd year benefits from an additional 4% allowance.
This results in a full exemption from income tax after 22 years of ownership.
For social contributions, allowances are spread over 30 years.
Capital gains become fully exempt from social contributions after 30 years of ownership.
A surtax may apply to net capital gains exceeding certain thresholds.
The applicable rules and thresholds can be consulted with the French tax authorities (DGFiP).
Finally, reform proposals were discussed in 2025, including the possible replacement of progressive allowances with a flat tax.
These developments should be monitored before making any major sale decision.
Calculating capital gains on a secondary residence: method and simulator
The calculation of capital gains on a secondary residence follows several precise steps.
Start by determining the acquisition price and purchase-related costs.
Add notary fees and agency commissions paid at purchase.
Include eligible works and, if applicable, a fixed allowance option.
The gross value is the difference between the sale price and the adjusted acquisition price.
Apply holding-period allowances to obtain the taxable value.
This amount serves as the basis for calculating income tax (19%) and social contributions (17.2%).
Since the 2025 reform, for furnished rental properties (LMNP), certain depreciation amounts may be reintegrated into the taxable base.
Check the applicable rules at the date of sale and provide depreciation schedules to the notary.
Online simulators can provide quick estimates.
However, these tools remain indicative and may not account for all specific situations.
For a reliable estimate, request a personalized simulation from your advisor or notary.
Deductible costs and depreciation to consider
Costs that increase the acquisition price include:
notary fees and registration duties;
agency commissions paid at purchase;
improvement, reconstruction or extension works, under specific conditions.
Depending on the situation, you may choose between actual expenses or a flat-rate allowance.
Maintenance and repair works are not always eligible.
For furnished rentals (LMNP), depreciation recorded may be reintegrated into the taxable base upon resale under rules updated in 2025.
Keep all invoices and supporting documents.
They will be required by the notary and tax authorities to support your deductions.
Practical example: step-by-step calculation of capital gains on a secondary residence
Scenario: Mr. Dupont purchased a holiday home in 2005 for €200,000.
He incurred €12,000 in notary fees and carried out €40,000 of eligible works.
He sells the property in 2026 for €350,000.
Adjusted acquisition price: €200,000 + €12,000 + €40,000 = €252,000.
Gross capital gain: €350,000 − €252,000 = €98,000.
Assuming a holding period of 21 years: for income tax, the allowance is 6% per year from the 6th to the 21st year.
This represents 16 years × 6% = 96% allowance on the income tax portion, almost eliminating income tax.
For social contributions, the allowance is lower, as full exemption occurs after 30 years.
After applying allowances, the remaining taxable value is multiplied by 19% and then by 17.2% to determine income tax and social contributions.
The final tax bill therefore depends on the holding period and applicable allowances.
To calculate your exact situation, use a simulator or consult your local advisor.
Exemptions and special cases for capital gains on secondary residences
Several situations allow full or partial exemption from capital gains tax on a secondary residence.
The main one is reinvesting the sale proceeds into the purchase of a primary residence.
If the seller reinvests the proceeds into a property intended to become their primary residence, an income tax exemption may apply under certain conditions.
The government specifies that a primary residence must be the habitual and effective place of residence.
No minimum duration is explicitly required, but tax authorities may request proof of actual occupation.
Other exemptions exist for individuals with disabilities or retired persons subject to income thresholds.
Sales motivated by compelling reasons (job relocation, medical reasons, divorce) may also qualify for specific measures.
Non-resident sellers must check applicable tax treaties and may need to appoint a tax representative.
Exemption when purchasing a primary residence after the sale
The reinvestment mechanism allows, under conditions, exemption of capital gains on a property that was not the primary residence.
To benefit, proof of reinvestment is required: purchase deed, payment evidence and proof that the property is used as a primary residence.
The notary and tax authorities will verify the submitted documents.
In case of doubt, keep all supporting evidence and seek advice in advance.
Specific exemptions: retirees, disability, family situations
Retired sellers or holders of a disability card may, subject to income conditions, qualify for exemption.
Certain compelling family or professional situations are also recognized as grounds for exemption.
Each case is examined individually by the tax authorities.
Professional support facilitates file preparation and submission of required documents.
Major developments in property capital gains taxation in 2025–2026
The 2025 Finance Act and subsequent debates opened the door to significant reforms in capital gains taxation.
Proposals included replacing progressive allowances with a single flat tax on capital gains.
The proposed flat tax would range between 30% and 33%, depending on discussions.
If adopted, this change would significantly alter long-term holding strategies.
Reforms also addressed the inclusion of LMNP depreciation in capital gains calculations.
These developments create uncertainty that should be monitored carefully.
Before any major sale, follow official publications (BOFiP, service-public.fr) and consult your tax or real estate advisor.
Proposed abolition of progressive allowances
Removing allowances would eliminate income tax exemption after 22 years and social contribution exemption after 30 years.
Replacing them with a flat tax would fundamentally change how holding duration impacts taxation.
Long-term property owners would be particularly affected.
Stay vigilant, as proposals may evolve until final adoption.
Potential impacts and recommended strategies to anticipate changes
Several strategies can help anticipate stricter taxation: selling before reforms take effect, reinvesting in a primary residence, or reviewing ownership structures.
Options such as holding property through an SCI (property company) or using usufruct arrangements may provide flexibility.
Have tax and wealth simulations prepared by a professional.
Your local real estate advisor can help align tax simulations with actual market conditions.
Capital gains on secondary residences: specific sectors and situations
Rules vary depending on the sector: new property (VEFA), furnished rentals, life annuities, luxury properties, commercial premises.
These specificities affect capital gain calculations, taxation and exemptions.
For new builds and VEFA, the holding period starts at delivery or completion.
The four-year completion deadline is a key rule for certain tax schemes.
For furnished rentals (LMNP), depreciation now impacts the taxable base upon resale.
Life annuities involve specific calculations due to rights of use and habitation.
Luxury properties and commercial premises are subject to specific accounting and tax rules.
In all cases, have your situation reviewed by a notary and a specialized advisor.
Tax specifics for new secondary residences and VEFA
For VEFA purchases, the holding period begins at delivery or completion.
Compliance with the four-year completion deadline is essential for certain tax benefits.
Registration duties, acquisition costs and Finance Act provisions may affect the taxable base.
Consult a notary to accurately assess the tax impact of your transaction.
Secondary residences rented out: furnished rentals, leasing and life annuities
For furnished rental secondary residences, opting for the actual tax regime has tax consequences.
Depreciation reduces taxable rental income but may be reintegrated upon resale.
Since 2025, depreciation reintegration must be reviewed on a case-by-case basis.
Life annuity sales require specific expertise to correctly assess taxable capital gains.
Practical tips to optimize capital gains taxation on a secondary residence
To reduce taxation, plan the sale in advance.
Accurately calculate the holding period and its impact on allowances.
Reinvesting proceeds into a primary residence may allow exemption, subject to conditions.
Keep and centralize all invoices and supporting documents for works and costs.
Avoid rushed sales without valuation or tax simulation.
Work with a notary and tax advisor early to secure the transaction.
Finally, contact your local Capifrance real estate advisor for a strategy tailored to market conditions and regulations.
Planning your sale based on allowances and holding periods
Identify the acquisition date and calculate available allowances.
Delaying a sale by one or two years can sometimes result in significant tax savings.
Request a personalized numerical simulation before deciding.
Why using a local real estate advisor is a major advantage
A local real estate advisor knows prices, demand and sales timelines.
They coordinate experts (notary, accountant) and verify required documentation.
At Capifrance, our advisors combine local market knowledge with personalized tax support.
Contact your local real estate advisor to successfully sell your secondary residence
Every secondary residence sale project is unique.
Our Capifrance advisors help simulate capital gains and gather supporting documents.
They prepare a strategy tailored to your situation and regulatory changes.
Contact a local Capifrance real estate advisor for a free valuation and practical advice.
Key takeaways
Capital gains correspond to the difference between the sale price and the acquisition price increased by eligible costs and works.
The nominal tax rate is 36.2% (19% income tax + 17.2% social contributions).
Allowances lead to income tax exemption after 22 years and social contribution exemption after 30 years.
Exemptions exist (reinvestment in a primary residence, disability, retirement under conditions, compelling reasons).
Depreciation on furnished rentals impacts taxation since the 2025 reform: keep depreciation schedules.
Keep all invoices and supporting documents: they are essential to reduce the taxable base.
To secure your transaction and optimize taxation, contact a local Capifrance real estate advisor.
FAQ
How is capital gains tax calculated on a secondary residence?
Capital gains are calculated by subtracting the adjusted acquisition price (including eligible costs and works) from the sale price, then applying holding-period allowances to obtain the taxable value.
After how long can capital gains tax be fully exempt on a secondary residence?
Income tax exemption applies after 22 years of ownership, and social contribution exemption after 30 years.
How can you avoid paying capital gains tax on a secondary residence?
Reinvesting proceeds into the purchase of a primary residence may allow exemption. Other exemptions exist under specific conditions and with supporting documents.
What are the impacts of the 2025 tax reforms on property capital gains?
Proposed reforms aimed to replace allowances with a flat tax. If adopted, they would significantly change taxation on secondary residences.
Should you use a real estate advisor when selling a secondary residence?
Yes. A local advisor helps estimate the price, simulate taxation, gather documentation and optimize the sale timeline.
Author :
Frédéric Rémy – Director of Commercial Performance
A real estate professional for several years within the Capifrance network, I would like to share with you some essential advice to help you succeed in your real estate project with the support of our advisors.
