How much inheritance tax do you pay on a property in France?

The tax base: the property's market value at the date of death

French inheritance tax is calculated on the property's actual market value at the date of death, meaning its market price. The heirs declare this value in the inheritance tax return; undervaluing it exposes them to a reassessment by the French tax authority, while overvaluing it needlessly increases the tax.

The deceased's main home benefits from a 20% reduction on its value when, at the date of death, it is also occupied as a main home by the surviving spouse, the PACS partner, or one or more minor or protected adult children of the deceased, of their spouse or of their partner (Article 764 bis of the French General Tax Code). The deceased's duly substantiated debts, including the outstanding capital of a mortgage, are deducted from the taxable estate (Article 768 of the CGI).

The allowances by family relationship (Article 779 of the CGI)

Each heir applies to their share an allowance whose amount depends on their relationship with the deceased. In the direct line, it is 100,000 € per parent and per child; however, gifts the deceased made to that heir within the previous fifteen years are set against this allowance (the tax recall rule of Article 784 of the CGI).

• Child or parent of the deceased: 100,000 € (Article 779, I of the CGI).
• Brother or sister: 15,932 € (Article 779, IV), except the full exemption for a brother or sister who is single, widowed, divorced or legally separated, is over 50 or has a disability preventing them from working, and lived continuously with the deceased during the five years before the death (Article 796-0 ter of the CGI).
• Nephew or niece: 7,967 € (Article 779, V).
• Heir with a disability: an additional allowance of 159,325 €, which can be combined with the others (Article 779, II).
• Where no other allowance applies: 1,594 € (Article 788, IV).

The progressive scale in the direct line (Article 777 of the CGI)

After the allowance, each child's taxable share is subject to the progressive scale below. Between brothers and sisters, the rates are 35% then 45%; between relatives up to and including the fourth degree, the rate is 55%; beyond that and between non-relatives, 60% (Article 777 of the CGI).

In the direct line, the scale is as follows: up to 8,072 €, 5%; from 8,072 € to 12,109 €, 10%; from 12,109 € to 15,932 €, 15%; from 15,932 € to 552,324 €, 20%; from 552,324 € to 902,838 €, 30%; from 902,838 € to 1,805,677 €, 40%; above 1,805,677 €, 45%.

Surviving spouse and PACS partner: full exemption

Since the French TEPA Act of 21 August 2007, the surviving spouse and the partner bound to the deceased by a PACS (French civil partnership) have been fully exempt from inheritance tax, whatever the value passed on (Article 796-0 bis of the CGI). This exemption does not, in principle, remove the obligation to file an inheritance tax return once the gross estate exceeds 50,000 € (Article 800 of the CGI).

Be careful: a PACS partner does not inherit automatically. Without a will, they have no rights in the estate; the tax exemption therefore only comes into play if a will names them as a legatee.