Property capital gains: calculation, allowances and exemptions

A capital gain is the difference between your sale price and your purchase price. If you buy a flat for 200\,000 € and sell it for 260\,000 €, your gross capital gain is 60\,000 €.

This gain is taxed, unless it is your main home. For a buy-to-let, the tax office applies a flat-rate income tax plus social charges.

Good news: the longer you hold the property, the less you pay. After 30 years of ownership, you owe nothing. The whole point is to calculate what you really pay.

The purchase price alone is not enough. You can increase it with acquisition costs and renovation works, which lowers your taxable gain.

For notary and agency fees, you choose between the actual amount with receipts or a flat 7.5% of the purchase price. On a 200\,000 € property, the flat rate adds 15\,000 € to the purchase price.

For works, if you have owned the property for more than 5 years, you can apply a flat 15% of the purchase price with no receipts, i.e. 30\,000 € here. The adjusted purchase price then rises from 200\,000 to 245\,000 €.

The taxable gain faces two levies. First income tax at the flat rate of 19%, then social charges at 17.2%.

In total, your gain is taxed at 36.2% before allowances. On a 15\,000 € gain after adjusting the price, the gross bill reaches 15\,000 \times 0.362 = 5\,430 €.

If your taxable gain exceeds 50\,000 €, a surtax of 2% to 6% applies. It mainly targets large deals, but it is worth anticipating.

This is the heart of the calculation. The longer you hold, the bigger the allowance, and the two levies follow different paces.

For the 19% tax, you gain 6% allowance per year from year 6 to year 21, then 4% in year 22. The result: full income-tax exemption after 22 years.

For the 17.2% social charges, the pace is slower: 1.65% per year up to year 21, then 9% per year from year 23 to year 30. So you have to wait 30 years for full exemption.

Some sales escape capital-gains tax entirely. The best known: your main home, exempt with no holding-period condition.

For a buy-to-let, the exemption mostly comes with time. After 30 years of ownership, the gain is wiped out, income tax and social charges included.

Other cases exist: a sale below 15,000 €, the first sale of a home other than your main residence if you reinvest in your future main home, or a sale by a retiree on modest income.

The capital gain is prepared at purchase, not at resale. If you aim for a medium-term exit, work out from the start what the tax office will take based on your holding horizon.

Keep all your works invoices: they raise your adjusted purchase price at actual cost when the 15% flat rate is less favourable. On a big renovation, the gap can mean several thousand euros less tax.

Before you buy, simulate your full scenario, from annual yield to exit capital gain. Buy&Rent builds resale taxation into its projections so you know your real net gain, not just the headline price.