The capital gains exemption on the main residence: how does it work?
The capital gain realised on the sale of your main residence is fully exempt from tax and social levies, under Article 150 U, II-1 of the CGI. The home must be your habitual and effective residence on the day of the sale, with no condition as to length of ownership.
The principle: a full and general exemption
Article 150 U, II-1 of the CGI exempts from property capital gains tax the sale of the home that constitutes the seller's main residence on the day of the sale. The exemption is total: it covers income tax as well as social levies, with no cap on price or gain, and without requiring a minimum length of ownership.
The exemption is general in nature: it is acquired as soon as the conditions are met, whatever the reasons for the sale or the use the buyer will make of the property. It extends to the immediate and necessary appurtenances sold simultaneously with the home (Article 150 U, II-3 of the CGI), such as a garage or a cellar.
- Full exemption: income tax + social levies.
- No condition as to length of ownership.
- Extension to immediate and necessary appurtenances sold at the same time (Art. 150 U, II-3 of the CGI).
The essential condition: habitual and effective residence
The home must constitute the seller's habitual and effective residence on the day of the sale. A habitual residence designates the place where the taxpayer resides for the greater part of the year; effective, real occupation is required. Occupation of pure convenience, intended solely to benefit from the exemption, is set aside by the authority and the tax judge.
Case law and administrative doctrine assess this case by case, from a body of indicators: energy consumption, tax address, mail, insurance, children's enrolment. The recurring point of vigilance concerns properties the seller has left before the sale.
- Habitual and effective occupation on the day of the sale.
- Proof by a body of indicators in the event of an audit.
- Fictitious or convenience occupation is not enough.
The case of a home put up for sale then vacated
Administrative doctrine accepts that the exemption applies where the home, effectively occupied as a main residence until it was put up for sale, is sold within a period considered normal, even if it is vacated before the deed is signed. The seller must have taken the necessary steps to sell as quickly as possible and the property must not have been let out or occupied free of charge in the interval.
The assessment of the normal time-to-sell depends on the circumstances (state of the local market, nature of the property). No fixed figure is set by law on a permanent basis: refer to the BOFiP doctrine in force and, in case of doubt, consult your notaire before vacating the home.
- Sale within a normal period after leaving the home: exemption maintained subject to conditions.
- Genuine steps to put the property on the market required.
- Neither letting nor free occupation of the property between departure and sale.
Frequently asked questions
Must I have lived in the home for a minimum number of years?
No. The exemption of Article 150 U, II-1 of the CGI imposes no condition as to length of ownership or minimum occupation. All that matters is that the property constitutes your habitual and effective residence on the day of the sale. A short but real occupation may suffice, provided it is not fictitious.
Does a second home benefit from this exemption?
No, the main-residence exemption does not apply to second homes or rental properties. These come under the general capital gains regime with allowances for length of ownership. Other specific exemptions may nonetheless exist, notably for a first sale of a home other than the main residence, subject to conditions.
Is my garage sold separately exempt?
The exemption covers immediate and necessary appurtenances sold at the same time as the main residence (Art. 150 U, II-3 of the CGI). A garage or cellar located nearby and sold concurrently may benefit. Sold separately or to a different buyer, they come under the general capital gains regime.
Read next
- Légifrance, article 150 U, II-1 et II-3 du Code général des impôts
- BOFiP, BOI-RFPI-PVI-10-40-10 (exonération de la résidence principale)
- Service-Public.fr, exonération de plus-value sur la résidence principale
- impots.gouv.fr, plus-values immobilières et résidence principale
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