Transfer taxes: What are they, and how are they calculated?
With our real estate agency in Paris's 16th arrondissement, CENTURY 21 Auteuil Immobilier: Find out how transfer taxes are calculated, when they must be paid, and how to pay them.
What are transfer taxes?
Transfer taxes, often referred to as transfer fees or notary fees, are taxes imposed by the government upon the transfer of ownership of real property or in connection with certain other asset transfers. This includes sales, gifts, and inheritance. These taxes are intended to finance the registration and maintenance of property deeds by local governments, particularly municipalities and departments.
Good to Know : The term “notary fees” refers to all costs associated with a real estate transaction, although transfer taxes are only one part of them. Other costs include the notary’s fees and various administrative expenses.
How are transfer taxes calculated?
Transfer taxes depend on several factors, primarily the type of property and its location. The rates vary, in particular, between older and newer properties, as well as depending on the department where the transaction takes place.
For older properties, transfer taxes are calculated at a rate of 5.80% of the sale price in most departments; this amount is divided among several taxes:
- 1.20% municipal tax;
- 3.80% departmental tax (on average);
- A 2.73% state tax, calculated based on the departmental tax.
In addition to this, there are notary fees and disbursements totaling approximately 1.20%.
The transfer tax rate for new homes is much lower: it amounts to 0.715% of the pre-tax sale price.
For a new property valued at €300,000 before tax, the transfer tax will amount to €17,400, whereas for a new property, this amount will be approximately €2,145.
What are the transfer taxes on real estate purchases?
When purchasing real estate, transfer taxes consist primarily of two components: registration fees and the land registry tax.
Registration fees are calculated as a percentage of the purchase price of the real estate. They are collected by the notary at the time of the signing of the deed of sale. These fees vary depending on the amount of the transaction and are included in the so-called “notary fees.”
The land registration tax funds the registration of property deeds. It is also collected by the notary, who remits it to the tax authorities. Like registration fees, the land registration tax is calculated as a percentage of the property’s purchase price and must be paid within two months of signing the deed of sale.
