Luxury real estate in France attracts a growing number of investors, drawn by the stability of the market and the tax implications linked to this type of asset. Villas in Provence, prestigious apartments in Paris, chalets in the Alps, or wine estates in Bordeaux: these valuable properties represent both an investment project and a tax challenge.
Between taxes, legal obligations, and optimization opportunities, understanding the taxation applicable to the acquisition and rental of high-end property is essential. In this guide, we outline the current rules and the key tax strategies to know.
1. What types of luxury real estate are concerned?
The concept of luxury real estate is not limited to the purchase price alone. It also depends on:
- Location (prestigious districts, seaside or ski resorts, major capitals),
- Characteristics (size, high-end amenities, associated services),
- Rarity (exceptional views, listed architecture, historic villas).
These prestigious properties, part of the high-end real estate market, fall under the French tax framework like any other dwelling, but their high value often entails heavier taxation, especially regarding the IFI (Wealth Tax).
2. Tax regimes applicable to prestigious properties
Purchase and ownership
- Transfer duties upon acquisition: around 7 to 8% of the property price, payable at the time of purchase.
- IFI (Impôt sur la Fortune Immobilière): applies if net taxable real estate assets exceed €1.3M. Luxury properties are therefore usually included.
High-end furnished rentals
- LMNP (Non-Professional Furnished Rental): rental income taxed as BIC. The investor can remain under the Micro-BIC regime (50% allowance) or opt for the real regime, which is more advantageous tax-wise as it allows the deduction of expenses and property depreciation.
- LMP (Professional Furnished Rental): applicable if annual income exceeds €23,000 and represents the majority of household income. This regime allows deficits to be offset against total income and provides favorable rules for capital gains on resale.
Resale and capital gains
The sale of a luxury property is subject to capital gains tax:
- 19% tax + 17.2% social contributions, with progressive allowances depending on the length of ownership.
- Special case: if the property is held via an SCI (property company) or a holding company, the applicable tax regime may vary depending on the chosen tax status (income tax or corporate tax).
3. Tax optimization opportunities in luxury real estate
Despite a high tax burden, several levers make it possible to reduce the fiscal pressure:
- Depreciation under the real LMNP regime: a powerful tool to limit taxable income.
- Deductible works: renovation, energy efficiency, or comfort improvements to the dwelling.
- SCI under corporate tax: a solution to smooth results and reinvest more easily.
- Family holding company: to optimize wealth transfer and protect high-end real estate assets.
- Green tax strategies: benefit from schemes linked to energy transition.
4. Wealth management and adapted tax strategies
Managing a luxury property requires long-term planning:
- Create an SCI to organize inheritance and allocate rights among heirs.
- Set up a family holding company to centralize multiple real estate investments and optimize tax payments.
- Anticipate inheritance tax: for a property worth several million euros, the right legal and tax framework can significantly reduce the applicable tax rate.
FAQ: Luxury Real Estate Taxation
What are the main taxes associated with the acquisition of luxury real estate?
Transfer duties, property tax, and potentially the IFI if the €1.3M threshold is exceeded.
How can one benefit from tax reductions in luxury real estate?
By opting for the LMNP real regime, carrying out eligible works, or through wealth management strategies (SCI, holding company).
What are the advantages of a family holding company?
It optimizes taxation, facilitates inheritance, and reduces the impact of succession duties.
Conclusion
Luxury real estate in France is a solid investment, but its tax treatment requires rigor and anticipation. Between taxes, duties, specific regimes, and wealth management strategies, the key is to be well advised.
At Lodgis, we support property owners of prestigious assets to optimize their taxation, protect their property, and maximize their long-term returns.
