Are you an expatriate and receiving rental income in France? Understanding your taxation is essential to avoid unpleasant surprises. With a minimum rate of 20%, social charges reaching up to 17.2%, and available tax optimization options, the taxation of property income for non-residents requires a strategic approach.
This guide clearly explains how your taxes are calculated, which rates apply to your situation, and how to optimize your tax situation using existing mechanisms. You will also discover the practical steps for declaring your income and benefiting from all your rights.
Minimum tax rate: 20% or 30% depending on your income
First rule to remember: As a non-resident, you are subject to a minimum tax rate on your French-source property income.
According to impots.gouv.fr, these minimum rates are set at:
20% for net taxable income ≤ €29,315 (2024 income)
30% for net taxable income > this threshold
Concrete example: You receive €25,000 in annual rent from an unfurnished rental. With the standard 30% deduction of the micro-foncier regime, your net taxable income is €17,500. Your minimum tax will be €17,500 × 20% = €3,500.
💡 Remember: The tax authorities calculate your tax using two methods (progressive scale AND minimum rate) and then apply the higher amount.
Social charges: 17.2% or 7.5% depending on your country
Social charges often represent as significant a burden as the tax itself. Their rate depends on your social security affiliation.
Standard rate: 17.2%
By default, your property income is subject to 17.2% social charges (CSG 9.2% + CRDS 0.5% + solidarity levy 7.5%).
Reduced rate: 7.5%
Following the De Ruyter ruling by the ECJ (February 26, 2015), you are exempt from CSG and CRDS if you meet two conditions:
Be affiliated with a social security scheme of a country in the EU, EEA, Switzerland, or United Kingdom
Do not be subject to a mandatory French scheme
⚠️ Warning: The exemption is not automatic. You must check boxes 8SH and/or 8SI in your 2042 C declaration and keep your affiliation proof (S1 form).
Numerical example: On €17,500 of net property income:
With 17.2%: €3,010 in social charges
With 7.5%: €1,313 → Savings: €1,697 per year
Average tax rate: the option that can halve your tax
The average rate is the secret weapon to optimize your non-resident tax situation.
How does it work?
Instead of applying the minimum rate of 20%/30%, the tax authorities calculate the rate that would apply if all your worldwide income (French + foreign) were taxed in France according to the progressive scale. This average rate is then applied only to your French income.
Concrete example:
You are single and declare:
€20,000 in property income in France
€15,000 in foreign wages
Total worldwide income: €35,000
According to the progressive scale, the tax on €35,000 would be €2,681 → average rate = 7.66%
Without average rate option: €20,000 × 20% = €4,000 With average rate option: €20,000 × 7.66% = €1,532 Savings: €2,468 (i.e., 62% savings!)
✅ Good to know: The option is checked directly in your online declaration. You must declare your worldwide income and be able to justify it.
Tax regimes: micro-foncier vs. real regime
The micro-foncier regime automatically applies if your gross rental income ≤ €15,000 annually (30% standard deduction).
The real regime allows you to deduct your actual expenses: mortgage interest, repairs, management fees, property tax, insurance.
Which regime to choose? Opt for the real regime if your expenses exceed 30% of your gross rents.
Example: For €30,000 in rents with €12,000 in actual expenses:
Micro-foncier: taxable income €21,000 → tax €4,200
Real regime: taxable income €18,000 → tax €3,600 → Savings €600
⚠️ Warning: The option for the real regime is irrevocable for 3 years. Form 2044 mandatory.
Furnished rental: BIC and increased allowances
If you rent out a furnished property, your income falls under BIC (industrial and commercial profits).
Micro-BIC regime: allowances
For 2024:
71% for classified tourist accommodations
50% for classic furnished rentals
Starting in 2025:
50% for classified rentals (ceiling €77,700)
30% for non-classified rentals (ceiling €15,000)
LMNP status: Under the real regime, LMNP allows the deduction of property and furniture depreciation, creating a carryforward loss allowing you to pay no tax for 8 to 15 years.
Real estate capital gains: taxation on resale
When selling a property in France, non-residents are taxed on the capital gains according to specific rules.
Tax rate:
19% tax on the capital gain
17.2% in social charges (or 7.5% if eligible for CSG/CRDS exemption)
Total: 36.2% (or 26.5% with exemption)
Calculation of the capital gain: Capital gain = Sale price - (Purchase price + notary fees + justified works)
Reductions for holding period apply:
Total tax exemption after 22 years of holding period
Total exemption from social charges after 30 years
⚠️ Fiscal representative: Non-residents outside the EU/EEA must appoint a tax representative in France for the sale, who will be jointly liable for the payment of the tax.
✅ Good to know: Certain exemptions exist, notably for the principal residence (subject to strict conditions for expatriates) and the first sale of a property other than the principal residence under income conditions.
Declaration and obligations of non-residents
Forms to fill out:
Form 2042 NR: main declaration
Form 2044: property income under the real regime
Form 2042 C: CSG/CRDS exemption (boxes 8SH/8SI)
Form 2074: real estate capital gains
Deadline: May 31 of the year following the year the income was received
Competent service: Tax Service for Non-Residents - TSA 10010, 10 rue du Centre, 93465 Noisy-le-Grand Cedex
📋 Declaration checklist:
☑ Declare all your French property income
☑ Check boxes 8SH/8SI if eligible for CSG/CRDS exemption
☑ Opt for the average rate if advantageous
☑ Attach supporting documents (foreign social security certificate)
☑ Keep all supporting documents for 3 years
⚠️ Penalties: Non-compliance results in penalties that can reach 40% of the amounts due, plus late payment interest.
Tax treaties and IFI: what you need to know
International tax treaties
France has signed treaties with over 120 countries to avoid double taxation. These treaties determine:
The country with the right to tax (generally the source country for real estate)
The mechanism for eliminating double taxation (tax credit or exemption)
How does it work? You declare your French property income in your country of residence, but you can deduct the French tax paid from your local tax. Your country of residence is responsible for eliminating the double taxation according to the applicable treaty.
Check your treaty: Consult the country fact sheets on impots.gouv.fr to know the specific provisions between France and your country of residence.
IFI (French Wealth Tax on Real Estate)
Non-residents are liable for IFI on their French real property wealth if its net value exceeds €1.3 million.
IFI scale:
0.5% to 1.5% depending on the value of the wealth
Declaration via form 2042-IFI
Only real estate located in France is concerned
Optimization: Holding through a SCI or splitting ownership can reduce the IFI tax base.
Optimizing your taxation: winning strategies
1. Structure via a SCI
The SCI for expatriates offers several advantages:
Eased transmission: Partial donation instead of the property
Inheritance optimization: Reducing the IFI base by splitting ownership
Collective management: Ideal for properties held within a family
Fiscal transparency: Income remains taxed at the associate level
2. Invest in LMNP
The LMNP status under the real regime allows you to pay no tax on your rents for 8 to 15 years thanks to amortization. It's one of the most powerful tax breaks for expatriates.
3. Plan your works
Plan your deductible works in the year when your rental income is highest to maximize the tax impact. Under the real regime, all repair, maintenance, and improvement works (except expansion) are deductible.
4. Optimized financing
Traditional banks generally require 30 to 40% down payment for non-residents. Invexa negotiates with its banking partners for conditions comparable to French residents: only 10% to 20% down payment, significantly improving your investment return.
⚠️ Pitfalls to avoid - The 5 common mistakes:
Forgetting to check boxes 8SH/8SI → You pay 17.2% instead of 7.5%
Not opting for the average rate → You pay 20% instead of a potentially lower rate under 10%
Staying in micro-foncier with a mortgage → You lose the deduction of mortgage interest
Ignoring the tax treaty → Risk of uncorrected double taxation
Neglecting the annual declaration → 40% penalties + late payment interest
Conclusion
The taxation of property income for non-residents follows specific rules that it is essential to master. The minimum tax rate of 20% or 30%, combined with social charges, represents a significant burden. However, several mechanisms allow for the optimization of this taxation: opting for the average rate, CSG/CRDS exemption, choosing the real regime, LMNP status, or structuring via SCI.
Don't forget to consider capital gains taxation on resale and IFI if your French real estate wealth exceeds €1.3 million. International tax treaties also play a key role in avoiding double taxation.
Invexa supports French expatriates in optimizing their real estate taxation and accessing financing under advantageous conditions. Our expertise in international tax treaties and our network of banking partners guarantee you a secure and optimized investment from abroad.
Contact our Invexa experts today for a personalized tax review and discover how to legally reduce your taxation on your French property income.
