Real Estate VAT in France: Understanding the Key Rules for Buying or Selling

VAT is a major consideration in any real estate transaction. Whether you are a buyer or a seller, understanding the VAT regime applicable to your property transaction is essential to avoid any unpleasant surprises.

Indeed, VAT on property sales varies depending on:

• the age of the property,
• the seller’s status,
• and the nature of the project (new construction, resale, etc.).

Here is a complete overview of real estate VAT in France, illustrated with practical examples.

1. General Principles of Real Estate VAT

Real estate VAT applies according to three main criteria:

• the seller’s status (VAT-registered or not),
• the property’s age (less or more than 5 years since completion),
• and the possible VAT option (VAT on total price).

We often refer to “VAT on property sales under 5 years” or “real estate VAT” because the 5-year threshold determines whether VAT applies or not.

2. The Most Common Case: Sale of a New Building by a VAT-Registered Seller

This is the typical case of a VEFA sale (“vente en l’état futur d’achèvement” – sale before completion) or the sale of a newly built house.

Example: Claire buys a new apartment in Val d’Isère directly from the developer. The property was completed 2 years ago. The developer is VAT-registered.

➡ 20% VAT on the total sale price (included in the sale price) ➡ Reduced registration duties at 0.715% (instead of full-rate duties).

This “new construction VAT” regime provides an advantage for the buyer through lower acquisition costs.

3. Case of an Old Building Sold by a VAT-Registered Seller

Example: Pierre is a property trader. He sells an old apartment in Méribel, purchased 6 years earlier without deducting VAT. He now wishes to sell it.

➡ Since the property is more than 5 years old, the sale is VAT-exempt.

4. Case of a Non-VAT-Registered Seller

Example 1: Marie, an individual, sells her detached house purchased 7 years ago.

➡ No VAT applies: full exemption.

➡ Subject to standard registration duties.

➡ This is a common case of a sale of an old property where no VAT applies.

Example 2: Julien, an individual, sells an apartment bought off-plan (VEFA) 3 years earlier.

➡ Although the property is still considered “new” for tax purposes (less than 5 years), Julien is not VAT-registered, so the sale is VAT-exempt.

➡ However, it is important to check “quasi-professional” cases where individuals may be reclassified as VAT-registered sellers.

This situation mainly concerns early resales (such as a “resale of a new apartment before 5 years with VAT implications”).

5. Key Points to Remember

• A “new” property is one completed less than 5 years ago (based on the completion declaration), regardless of resale or ownership.
• A VAT-registered seller may be a developer, trader, or even an individual who previously reclaimed VAT.
• The tax regime directly impacts the buyer’s acquisition costs.
• The notaire is a key advisor to help determine the appropriate tax structure.

Summary Table: Real Estate VAT Regimes

VAT on property sales in France is a complex but crucial subject. Whether you are buying or selling, dealing with new or old property, as an individual or professional, it is essential to anticipate the tax consequences of your transaction. For any project involving a new property purchase with VAT, the sale of an old property, or the resale of an apartment within 5 years, it is strongly recommended to consult a notaire to benefit from secure and personalized advice.

As notaires specialized in real estate law, we guarantee the legal security of your sale or purchase, whether for a new or existing property. Present at every stage of the transaction, we act with precision and in full compliance with our professional ethics.

Contact our international team now to secure and optimize your transaction.

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