Can renovation invoices reduce capital gains tax on property sales?

Updated as of July 2026

You are selling a property that you renovated extensively a few years ago: a brand-new kitchen, a house extension, full insulation, a completely redesigned bathroom... These improvements have significantly increased the value of your home, but can they also reduce the tax you pay when you sell? Many homeowners discover—often too late—that some renovation invoices could have been used to lower their capital gains tax liability.

The answer is yes, but under strict conditions. Not all renovation invoices are treated equally by the French tax authorities, and choosing the wrong option between the statutory 15% flat-rate allowance and the deduction of actual renovation costs could cost you several thousand euros.

This article provides a comprehensive overview of the rules applicable in 2026: which renovation works are deductible, how to choose between the 15% flat-rate allowance and the deduction of actual costs supported by invoices, which documents you must keep, and how to legally optimize the calculation of your taxable capital gain.

Before putting your property on the market, it is essential to obtain an accurate valuation and anticipate the tax implications of the sale. Start by requesting an online property valuation to receive an initial estimate of your property's value, then contact your local Capifrance real estate advisor for personalized guidance on calculating your capital gain and managing every stage of the selling process.

In summary 

Capital gains on real estate are subject to a combined tax rate of 36.2%, consisting of 19% income tax and 17.2% social security contributions, before the application of any ownership-related tax allowances.

If you have owned your property for more than five years, you can either apply a 15% flat-rate allowance to the purchase price without providing supporting documentation, or deduct the actual cost of eligible renovation work by submitting valid invoices.

Only construction, reconstruction, extension, or improvement work carried out by a qualified contractor or building professional qualifies under the actual-cost method. Routine maintenance, repairs, and DIY projects are not eligible for deduction.

To be accepted by the tax authorities, invoices must be issued in your name, clearly itemized, fully paid, and must not already have been deducted from your rental income or used in a previous tax calculation.

Choosing between the 15% flat-rate allowance and the actual cost method before completing your sale can significantly reduce your taxable capital gain and, in many cases, save you several thousand euros in tax.

Finally, be sure to keep all invoices and supporting documents for several years after the sale, as the French tax authorities may request them during a tax audit.

Understanding how property capital gains are calculated

How taxable capital gains are calculated

A property capital gain is the difference between the sale price and the purchase price of your property. The sale price used for tax purposes is the net selling price, which may be reduced by certain eligible expenses, such as mandatory property diagnostics or mortgage discharge fees.

The purchase price, however, can be increased by several items, which mechanically reduce the taxable capital gain:

• acquisition costs (notary fees and transfer taxes), calculated either at their actual amount or as a flat-rate 7.5% of the purchase price;
• eligible renovation costs, under the conditions explained later in this article;
• where applicable, road, utility and network connection costs for building plots.

The higher the adjusted purchase price, the lower the gross capital gain, and therefore the lower the tax due. This is precisely where renovation invoices become valuable: provided certain conditions are met, they allow you to increase the purchase price used in the tax calculation, thereby reducing your taxable capital gain.

Tax rates and ownership-related allowances

Capital gains realized by private individuals are subject to two separate taxes:

• income tax, charged at a flat rate of 19%;
• social security contributions, charged at 17.2%.

This results in a combined tax rate of 36.2% before any ownership-related tax allowances are applied.

However, the taxable gain is gradually reduced depending on how long you have owned the property:

• no allowance applies during the first five years of ownership;
• for income tax, the allowance is 6% per year from the 6th to the 21st year, then 4% in the 22nd year, resulting in a full exemption from income tax after 22 years of ownership;
• for social security contributions, the allowance is 1.65% per year from the 6th to the 21st year, 1.60% in the 22nd year, then 9% per year from the 23rd to the 30th year, leading to a full exemption after 30 years.

In addition, a surtax ranging from 2% to 6% may apply when the net taxable capital gain exceeds €50,000. This additional tax mainly affects second homes and high-value investment properties.

Cases where capital gains are exempt

Some property sales are entirely exempt from capital gains tax. This is notably the case for the sale of your main residence, which benefits from a full exemption regardless of how long you have owned it.

Other exemptions may also apply in specific circumstances, such as:

• the first sale of a property other than your main residence, subject to reinvestment conditions;
• sales for less than €15,000;
• sales by retirees or individuals with disabilities who meet certain income requirements.

If your property does not qualify for any of these exemptions, identifying which renovation works are deductible becomes a key factor in reducing your tax liability.

Renovation work and capital gains tax: two ways to reduce your tax bill

The 15% flat-rate allowance without supporting documents

If you have owned your property for more than five years, you may automatically apply a 15% flat-rate allowance to the purchase price, without providing a single renovation invoice.

This option offers several advantages:

• it applies even if you did not carry out any renovation work, or if you completed the work yourself;
• it avoids disputes over the nature or eligibility of the work performed;
• it is simple to apply, particularly for the notary responsible for calculating the taxable capital gain.

However, the allowance is fixed and does not reflect the actual amount you spent on renovations. If your eligible renovation costs exceed 15% of the purchase price, claiming the actual costs is generally the more advantageous option.

Deducting the actual cost of renovation work

Alternatively, you may choose to deduct the actual amount spent on eligible renovation work, provided you can support your claim with invoices issued by qualified contractors.

This option is particularly beneficial if:

• you have carried out major renovation or extension projects, such as a house extension, a full renovation, or the creation of additional living space;
• the total amount of your renovation invoices is significantly higher than 15% of the purchase price;
• you have retained all the original invoices and supporting documentation.

Be aware that recent case law has confirmed that the 15% flat-rate allowance is merely a simplified method of proof. In the event of a tax audit, the French tax authorities may still ask you to demonstrate that renovation work was actually carried out, even if you have opted for the flat-rate allowance.

For this reason, it is advisable to keep at least some evidence of the work completed, regardless of which method you choose.

Which option should you choose?

The choice between the 15% flat-rate allowance and the deduction of actual renovation costs mainly depends on two factors: the amount spent on renovation work and how long you have owned the property.

• If your renovation costs represent less than 15% of the purchase price, the flat-rate allowance is usually more advantageous and saves you the effort of gathering invoices.
• If your renovation costs exceed 15% of the purchase price, deducting the actual costs generally results in a lower taxable capital gain.
• If you have owned the property for less than five years, the 15% flat-rate allowance is not available. Only actual renovation costs supported by valid invoices can be taken into account.
• If you no longer have any renovation invoices, the 15% allowance remains your only option, provided you have owned the property for more than five years.

A simple comparison carried out with your notary or real estate advisor is usually enough to determine which option offers the greatest tax savings.

Which renovation invoices are actually deductible?

Eligible renovation work: construction, reconstruction, extensions and improvements

Only certain types of renovation work qualify for deduction under the actual-cost method. These include:

• construction: building a new property on a plot of land;
• reconstruction: the complete or partial rebuilding of an existing property;
• extensions: creating additional living space, such as an extension, adding another floor, or converting an attic;
• improvements: work that adds new comfort or modern facilities without altering the property's structure, such as installing central heating, creating a modern bathroom, fitting a new kitchen, upgrading the electrical system, or improving thermal insulation.

To qualify, the work must have been carried out by a professional contractor or building company.

DIY projects are never deductible under the actual-cost method, even if you purchased the materials yourself and kept all the receipts. This is one of the most common mistakes made by homeowners when calculating their taxable capital gain.

Conditions your invoices must meet

To be accepted by the French tax authorities, renovation invoices must satisfy several cumulative conditions. They must:

• be issued in your name and relate to the property being sold;
• be fully itemized, clearly describing the work carried out, the materials used, labour costs and the amounts charged;
• correspond to actual payments, supported by bank statements, wire transfers or other proof of payment;
• have been issued by an identifiable contractor or company, including a valid business registration number and contact details;
• not have already been included in a previous capital gains calculation (for example following an earlier inheritance or gift);
• not have already been deducted from your rental income if the property was let.

A quotation, purchase order or pro forma invoice is not sufficient. Only a final, paid invoice can be used to support a deduction. This requirement is often overlooked but can result in the entire deduction being rejected during a tax audit.

What cannot be deducted: routine maintenance and repairs

Conversely, some works are never deductible under the actual-cost method, even if they were carried out by a professional and properly invoiced, because they are considered routine maintenance rather than improvements.

These include:

• standard repair work, such as replacing a faulty boiler with an identical model, repairing a roof without improving it, or repainting walls;
• routine maintenance, including chimney sweeping, boiler servicing, or minor plumbing and electrical repairs;
• any work that simply maintains the property in its existing condition, without adding value or improving comfort.

The distinction between improvement work (deductible) and repair work (non-deductible) can sometimes be subtle.

For example, replacing an oil-fired boiler with a heat pump is considered an improvement and is deductible. Replacing it with another identical oil-fired boiler is regarded as a repair and therefore does not qualify.

If you are unsure how your renovation work should be classified, your real estate advisor or notary can help determine whether it is eligible for deduction.

Example: how renovation invoices can reduce your capital gains tax  

To better understand the financial impact, let's look at a practical example.

A homeowner purchased a property for €200,000 in 2014 and sold it for €320,000 in 2026, after 12 years of ownership. The gross capital gain is therefore €120,000.

Scenario A — Sale without renovation invoices (15% flat-rate allowance)

The seller no longer has any renovation invoices but has owned the property for more than five years. They therefore apply the 15% flat-rate allowance to the purchase price.

Flat-rate adjustment:
€200,000 × 15% = €30,000

Adjusted purchase price:
€200,000 + €30,000 = €230,000

Gross taxable capital gain:
€320,000 − €230,000 = €90,000

After applying the ownership-related tax allowances (12 years of ownership, meaning 7 years beyond the initial five-year period):

• Income tax allowance: 7 × 6% = 42%
  Taxable amount: €90,000 × 58% = €52,200
  Income tax (19%): €9,918
• Social security contributions allowance: 7 × 1.65% = 11.55%
  Taxable amount: €90,000 × 88.45% ≈ €79,605
  Social security contributions (17.2%): ≈ €13,692

Estimated total tax: approximately €23,610

Scenario B — Sale with eligible renovation invoices

The same homeowner actually carried out €45,000 of extension and renovation work through professional contractors and retained all the invoices.

Since this amount is significantly higher than the 15% flat-rate allowance (€30,000), they choose to deduct the actual renovation costs instead.

Adjusted purchase price:
€200,000 + €45,000 = €245,000

Gross taxable capital gain:
€320,000 − €245,000 = €75,000

After applying the same ownership-related allowances:

• Income tax:
  Taxable amount: €75,000 × 58% = €43,500
  Income tax (19%): ≈ €8,265
• Social security contributions:
  Taxable amount: €75,000 × 88.45% ≈ €66,337
  Social security contributions (17.2%): ≈ €11,410

Estimated total tax: approximately €19,675

Comparison and key takeaway

In this example, simply keeping and presenting the renovation invoices reduces the seller's tax bill by approximately €3,900. This saving results solely from the €15,000 difference between the flat-rate allowance and the actual renovation costs.

The greater the amount of eligible renovation work exceeds the 15% flat-rate allowance, the greater the potential tax savings.

For this reason, it is always advisable to compare both calculation methods before signing the preliminary sale agreement, giving yourself enough time to gather all the supporting documents required.

Tax rules in 2026: what you need to know

The rules in force in 2026

The 2026 Finance Act, enacted in February 2026, did not change the tax regime applicable to capital gains on real estate owned by private individuals.

Although an amendment proposing to reduce the ownership period required for a full income tax exemption—from 22 years to 17 years—was discussed during the legislative process, it was ultimately not included in the final version of the law.

As a result, the current rules remain unchanged for property sales completed in 2026:

• full exemption from income tax after 22 years of ownership;
• full exemption from social security contributions after 30 years of ownership.

A further review of these rules may be considered as part of the 2027 Finance Bill, but no changes have been adopted to date.

Likewise, the rules governing the deduction of renovation work—whether through the 15% flat-rate allowance or the deduction of actual eligible costs—have remained unchanged. The regime described throughout this article therefore continues to apply in full.

For complete regulatory information on French capital gains tax, including calculation methods, ownership-related allowances and exemption rules, you can consult the official guidance published on the French public administration website.

Filing requirements and the notary's role

In practice, the notary handling the sale is responsible for calculating the taxable capital gain and, where applicable, collecting and paying the tax on behalf of the seller at the time the final deed of sale is signed.

For this reason, you should prepare your documentation well before signing the preliminary sale agreement by:

• gathering all your renovation invoices;
• checking that they meet the conditions required for tax deductibility;
• providing these documents to your notary so they can calculate the most favourable tax treatment;
• comparing, with your notary's assistance, the 15% flat-rate allowance and the deduction of actual renovation costs.

The notary completes the official Form No. 2048-IMM-SD, which details the calculation of the taxable capital gain and forms the basis of the tax declaration.

Once the final deed of sale has been signed, it is too late to submit additional renovation invoices, making early preparation essential.

Supporting documents: what should you keep and for how long?

Documents to gather before selling

To claim a deduction for renovation work under the actual-cost method, you should be able to provide:

How long should you keep your documents?

The French tax authorities generally have three years to review your capital gains tax declaration. This period may be extended to ten years in cases involving proven tax fraud.

As a precaution, you should retain all renovation invoices and supporting documents for at least six years after the sale. Ideally, you should keep both the purchase deed and the deed of sale indefinitely, as they may also be required for future estate planning, inheritance, gifts or subsequent property transactions.

If you are unable to provide valid invoices or proof of payment during a tax audit, the tax authorities may reassess your tax liability, resulting in additional tax, interest and penalties.

For that reason, it is far easier to archive every renovation invoice as the work is completed than to try to reconstruct your records years later when selling the property.

Practical tips to reduce your capital gains tax

Plan ahead from the moment the work is completed

The best way to maximize your tax savings is to think about the eventual sale of your property as soon as the renovation work is carried out, even if you have no immediate plans to sell.

A few simple habits can make a significant difference:

• always request a detailed invoice from every contractor working on your property;
• keep all invoices together in a dedicated file, along with proof of payment;
• avoid paying contractors in cash without supporting documentation, as this may prevent you from claiming a deduction later;
• choose registered businesses with a valid business registration number whenever possible.

Work with professionals and verify the nature of the renovation

Before assuming that renovation costs are deductible, make sure the work qualifies as construction, reconstruction, an extension or an improvement, rather than routine maintenance or repairs.

If you are unsure how a project should be classified—particularly for energy-efficiency upgrades, extensions or major interior renovations—ask the contractor to provide a detailed description of the work performed, clearly stating its nature.

This document can prove valuable if the French tax authorities request additional evidence during a tax audit.

Get professional advice before selling

Calculating capital gains tax and deciding between the 15% flat-rate allowance and the actual-cost method can have a significant financial impact, often representing several thousand euros in tax savings.

Working with experienced professionals throughout the selling process helps you avoid costly mistakes and ensures your transaction is handled as efficiently as possible.

Get support from a Capifrance real estate advisor

Selling a property involves much more than agreeing on a price and signing a preliminary contract. It also means anticipating the tax consequences of the sale, particularly the calculation of your capital gain and the supporting documents required to justify any deductions.

A Capifrance real estate advisor can assist you throughout your project by providing:

• an accurate valuation of your property;
• advice on how your renovation work may affect your taxable capital gain;
• access to trusted notary partners;
• tailored guidance to help optimize your transaction under the best possible conditions.

Thanks to their in-depth knowledge of the local property market and sales procedures, your advisor can also help you identify, well in advance, the documents you should gather to maximize the deduction of your renovation costs.

Don't wait until the preliminary sale agreement has been signed to address these issues. Contact your localCapifrance real estate advisoras soon as you begin planning your sale, and request an online property valuation to obtain an initial estimate of your property's market value.

Conclusion

Renovation invoices can indeed reduce the capital gains tax payable when selling a property, provided several conditions are met. The work must have been carried out by a professional contractor, the invoices must be issued in your name, clearly itemized and fully paid, and the costs must not already have benefited from another tax deduction.

Choosing between the 15% flat-rate allowance and the deduction of actual renovation costs depends primarily on the amount spent on eligible work. This comparison should always be made before the sale, with the assistance of your notary or real estate advisor.

Key takeaways before selling your property

• Check that your renovation work qualifies as construction, reconstruction, an extension or an improvement, as these are the only categories eligible for deduction.
• Gather your invoices and proof of payment well before signing the preliminary sale agreement.
• Always compare the 15% flat-rate allowance with the actual-cost method to determine the most advantageous option.
• Keep your supporting documents for several years after the sale in case of a tax audit.
• Seek professional advice to ensure your capital gains calculation and tax declaration are accurate and fully compliant

FAQ

Can renovation work I carried out myself be deducted?

No. Only renovation work carried out and invoiced by a professional contractor or building company can be deducted under the actual-cost method.

If you completed the work yourself, even using high-quality materials that you purchased, you cannot deduct those costs. Your only option is to apply the 15% flat-rate allowance, provided you have owned the property for more than five years.

Can I combine the 15% flat-rate allowance with my actual renovation invoices?

No. These two options are mutually exclusive.

You must choose either the 15% flat-rate allowance based on the purchase price or the deduction of your actual eligible renovation costs supported by invoices. In practice, you should select whichever option provides the greatest tax benefit.

What if my renovation costs have already been deducted from my rental income?

In that case, those same renovation costs cannot be deducted again when calculating your taxable capital gain.

This rule prevents the same expense from generating a double tax benefit—first by reducing your rental income, and again by reducing the taxable gain when you sell the property.

When can I benefit from the 15% flat-rate allowance?

The 15% flat-rate allowance is only available if you have owned the property for more than five years at the time of sale.

If you sell the property before reaching this ownership period, only actual renovation costs supported by valid invoices can be added to the purchase price.

Do I need to submit my renovation invoices to the tax authorities when I sell?

No. You should provide your renovation invoices to the notary handling the sale, who will use them to calculate your taxable capital gain.

However, you must keep all supporting documents for several years after the sale, as the French tax authorities may request them during a tax audit.

Are property surveys and estate agency fees considered renovation work?

No. Mandatory property surveys, estate agency fees and administrative charges are not classified as renovation work.

Depending on the circumstances, they may be taken into account elsewhere in the calculation of the sale price or purchase price, but they cannot be included in the adjustment relating to construction, reconstruction, extension or improvement work.

What should I do if I can no longer find some of my old renovation invoices?

If some invoices are missing, you can contact the contractors who carried out the work to request duplicate copies. You may also be able to retrieve proof of payment from your bank.

If you are unable to recover the necessary documentation, you can still choose the 15% flat-rate allowance, provided you have owned the property for more than five years, rather than forgoing any increase to the purchase price.

Is a quotation or purchase order enough to prove the work was carried out?

No. The French tax authorities require a final paid invoice that clearly identifies the contractor and describes the renovation work performed.

A quotation, purchase order or photographs of the completed work are not sufficient to support a deduction in the event of a tax audit.

AUTHOR :​

Frédéric Rémy – Director of Commercial Performance

"With many years of experience in the real estate industry and within the Capifrance network, I am pleased to share essential insights and practical advice to help you successfully achieve your real estate goals alongside our advisors."