Skip to main content

FAQ - Canada - Real property - Capital gains

Published on October 21, 2014

Real property – Capital gain.


1 – I am a resident of Canada and I am selling a property in France. Can I claim the benefit of an exemption on the tax on capital gain on the sale of this property?

As a person nonresident of France for tax purposes, you can claim the benefit of a tax exemption on the capital gain on the sale of a property located in France stated in 2° of II of article 150 U of the French tax code “code général des impôts (CGI)”.

This article states that the sale by an individual that is not a resident of France is exempted from income tax if the seller is a national of a member State of the European Union.

To benefit from this exemption, the individual needs to have been a resident of France for tax purposes continuously for at least 2 years at any time prior to the sale of the property.

The above mentioned exemption applies, within the limit of one residence by taxpayer and € 150,000 of net taxable capital gain for sales made:

a) At the latest on December 31st of the fifth year following the year the seller transferred his tax residency outside of France ;

b) Without any time conditions when the seller has the property at his disposal since January 1st of the year prior to the sale.

For more information on the tax regime in France of capital gain on real property for nonresidents please visit the French tax administration website here

Article XIII of the French-Canadian tax treaty states that capital gain on the sale of real property is taxable in the country where the property is situated. However, this taxation isn’t exclusive and the country of residency can also tax this capital gain. The country of residency will then have to eliminate the possible double taxation by granting a tax credit.

In other words, a capital gain, exempted in France in regards to 2° of II of article 150 U of the French tax code should be declared to the Canadian tax administration. No tax credit will be granted if no tax was paid in France.

For more information on the taxation in Canada on the sale of a property located and taxed in France, please contact the Canadian tax administration by phone 1-800-622-6232 (Toll free, from Monday to Friday 8.00 am to 8.00 pm) or visit their website (here) and/or Revenu Québec (Their contact information can be found here


2 – I am a resident of Canada and I am selling a house/apartment in France. Where will the capital gain on this sale be taxed?

Article XIII of the French-Canadian tax treaty states that capital gain on the sale of real property is taxable in the country where the property is situated.

However, this taxation isn’t exclusive and the country of residency can also tax this capital gain. In other words, the capital gain received by a Canadian resident for the sale of a property in France will be subject to a withholding tax in France. This capital gain will also be taxable in Canada but the tax paid in France will be deductible from the Canadian tax (“tax credit”).

Please note that if your capital gain on real property was exempted in France, no tax credit will be granted in Canada.

For more information on the calculation of capital gain taxes in France, please visit the French tax administration website here

For more information on the taxation in Canada on the sale of a property located and taxed in France, please contact the Canadian tax administration by phone 1-800-622-6232 (Toll free, from Monday to Friday 8.00 am to 8.00 pm) or visit their website (here) and/or Revenu Québec (Their contact information can be found here


3 - I am a resident of Canada and I am planning on selling a property I have in France. What would be my tax obligations and how would the capital gain arising from the sale be assessed and taxed?

Sales of real estate located in France made by non-residents are liable to capital gain tax (and, from 18 August 2012, to social contributions as well). The capital gain is calculated in the same way as for French residents.

Capital gains made by non-residents on occasional sales of properties located in France are subject to a one-third withholding (33,33 %) tax (sales prior to January 1st 2015) or a 19 % withholding tax (sales after January 1st 2015) collected when the deed is submitted to registration duties and to social contributions of 15.5 %.

Calculation

The capital gain is calculated in the same way as for French residents.

  • Income tax

    Since September 1st 2013, a change in legislation on the taxation of real estate gains reduced from 30 to 22 years the period of detention beyond which the gain on the sale of a property in France is totally exempt.

    The “years of ownership deduction” (abattement pour durée de détention) is 6 % per year after the fifth year of ownership until the 21st year. The deduction applied on the 22nd and final year of ownership is 4 %.

    The rate on net capital gain obtained after deductions is 33 1/3 % (before January 1st 2015) or 19 % (after January 1st 2015).

  • Social contributions :

    With regards to social security contributions, the “years of ownership deduction” is not the same as for the income tax.

    After the fifth year of ownership, the deduction applied on capital gain is 1.65% per year until the 21st year. It is of 1.6% on the 22nd year and 9 % for each year beyond the 22nd year.

    Total exemption from social security contributions is thus applied beyond an ownership of 30 years.

    The net gain obtained after deducting the “years of ownership deduction” and the exceptional 25 % reduction, if applicable, is taxed with social contributions at a rate of 15.5%.

  • Tax on high real estate gains :

    If the net capital gain exceeds € 50,000, an additional tax (2 to 6 % of the gain) may also apply.

    Payment and filing

    The one-third (or 19 %) withholding tax is collected when the deed is submitted for registration (or failing that, within one month of the sale of the property) and when the tax return (2048-IMM) has been filed.

    The non-resident seller is required to appoint a professional tax representative or an individual approved by the French Revenue. This representative should act as an agent and should be responsible for the filing of the tax return and for the payment of the relevant amount of tax on behalf of the seller.


Return home

Return to FAQ

      top of the page