Selling an inherited house raises an unavoidable tax question: how does property capital gains tax work in this particular context? Unlike a standard sale, the calculation is based on the value declared at the time of the succession rather than on an original purchase price. The holding period, which includes the period during which the deceased owned the property, plays a decisive role in the final amount of tax. Drawing on the tax rules in force in 2026, this article sets out the calculation rules, the applicable allowances and the cases of exemption to be aware of before signing a preliminary sales agreement.
Summary
- The acquisition value used for an inherited property is the one declared in the estate tax return (déclaration de succession), not a price paid.
- Holding period allowances apply: full exemption from income tax after 22 years, and from social contributions after 30 years.
- The deceased's holding period is added to the heir's, which can accelerate, or even guarantee, the exemption.
- If the property becomes the heir's main residence, or remains the deceased's main residence until the sale, a full exemption may apply.
Understanding How Capital Gains Work on an Inherited Property
When an heir sells a house received through succession, the tax authorities calculate a property capital gain according to a specific logic. The sale price is not compared with a historical purchase price, but with the value used when the estate was settled.
The General Principle of Property Capital Gains
The capital gain is the difference between the sale price of the property and its acquisition value, after deducting any applicable costs and allowances. This gain is subject to income tax at a rate of 19% and to social contributions at a rate of 17.2%, for a total tax rate of 36.2% before holding period allowances.
Specific Tax Treatment for Properties Acquired Through Succession
For an inherited property, the acquisition value is not a price paid by the heir but the market value of the property declared in the succession deed, on which the inheritance tax was calculated. This value serves as the reference for determining the taxable capital gain at the time of resale.
The Acquisition Value Used for an Inherited Property
This point is decisive: the closer the value declared in the succession is to the actual market value, the lower the taxable capital gain will be on a later resale.
Value Declared in the Estate Tax Return
The value used is the one stated in the estate tax return filed with the tax authorities, generally prepared with the help of a notary. It must reflect the property's actual market value on the date of death. An initial undervaluation, sometimes made to reduce inheritance tax, can therefore backfire on the heirs at the time of resale by producing a larger capital gain.
What to Do if the Value Is Adjusted?
If the tax authorities have adjusted the declared value within six months of the filing of the return, this adjusted value must be used as the acquisition value. It is therefore essential to keep all documents relating to the succession, including any valuations by experts or notaries, in order to justify the value used in the event of an audit.
Holding Period Allowances in 2026
The amount of tax due depends heavily on how long the property has been held, with a progressive allowance mechanism reducing, and then eliminating, the taxable base.
Allowance Applicable to Income Tax
For income tax, no allowance applies during the first five years of ownership. From the sixth year onward, an allowance of 6% per year applies up to the twenty-first year, followed by an allowance of 4% in the twenty-second year. The result is a full exemption after 22 years of ownership for the income tax portion.
Allowance Applicable to Social Contributions
For social security contributions, the pace is different: a 1.65% allowance per year from the sixth to the twenty-first year, 1.60% for the twenty-second year, then 9% per year from the twenty-third to the thirtieth year. Full exemption from social security contributions therefore only occurs after 30 years of ownership. It is this gap between 22 and 30 years that explains why a property can be exempt from income tax while remaining partially subject to social security contributions.
Adding Up the Deceased's Period of Ownership
A little-known advantage directly benefits heirs who are in a hurry to sell a property inherited from a family estate.
A Favourable Starting Point for Heirs
The ownership period taken into account when calculating the allowances does not begin on the date of death, but goes back to the date on which the deceased originally acquired the property. Thus, if the deceased had owned the house for 25 years, the heir already benefits from a partial, or even full, exemption depending on the length of prior ownership, from the moment the property is transferred.
Practical Consequences for a Quick Sale
This cumulation rule explains why many old family homes are sold without any tax, or with very light taxation, even when the sale takes place shortly after the death. It is therefore essential to trace the original acquisition date of the property precisely in order to optimise the calculation of the capital gain.
Exemptions for a Main Residence
Beyond the length of ownership, certain situations allow a full exemption from capital gains tax, regardless of the number of years elapsed.
The Deceased's Main Residence on the Date of Death
If the property was the deceased's main residence at the time of death, an exemption may apply under certain conditions, in particular where the home was occupied free of charge by the surviving spouse or another occupant until it was put up for sale, within a reasonable time after the death.
The Heir's Main Residence After the Succession
If the heir decides to occupy the inherited property as their own main residence before selling it, they then benefit from the full capital gains exemption that applies to any main residence, regardless of the length of ownership. This strategy can be worthwhile when the property meets the heir's own housing needs.
Deductible Costs to Reduce the Taxable Capital Gain
Several expenses can reduce the taxable base, which lowers the final tax bill accordingly.
Costs Related to the Succession Itself
The transfer duties paid on the succession, as well as certain notary fees, can be added to the acquisition value used, which mechanically reduces the taxable capital gain. A flat-rate allowance of 7.5% of the acquisition value may also be applied without supporting documents if the property has been owned for at least five years.
Work Carried Out on the Property
Construction, reconstruction, extension or improvement work carried out by the seller, provided it is supported by invoices from contractors, can be deducted at its actual cost, or by a flat-rate allowance of 15% of the acquisition value if the property has been owned for more than five years, with no requirement to provide supporting documents in the latter case.
Conclusion
The taxation of the capital gain on an inherited house follows precise rules that are often advantageous for heirs, particularly thanks to the cumulation of the deceased's period of ownership. Between the value declared in the succession, progressive allowances up to 22 and 30 years, main residence exemptions and deductible costs, each situation deserves a personalised analysis. Before putting a property on the market, it is strongly advisable to obtain a precise property valuation and to consult a professional to secure the calculation of the capital gain and optimise the transaction.
The Expert's Word
"Selling an inherited house is often an emotionally charged moment, and the tax question sometimes adds to this family complexity. What I see every day with heirs is an almost systematic lack of awareness of two rules that are nonetheless decisive: the cumulation of the deceased's holding period, which can shift a sale from heavy taxation to a full exemption, and the critical importance of the value declared in the estate. Too many heirs discover, at the time of sale, that an approximate valuation made years earlier during the settlement of the estate now generates an artificially high capital gain. My advice is always the same: before even considering putting the property on the market, you need to reconstruct the complete history of the property, find the date of initial acquisition by the deceased, gather supporting documents for any works carried out, and verify the value used in the estate. This preparatory work, carried out beforehand with a real estate advisor and, if necessary, a notary or a chartered accountant, often makes it possible to significantly reduce the applicable tax, or even to eliminate it entirely when the holding period or main residence conditions are met. This is support that we systematically offer our clients so that they can approach the sale with complete peace of mind."
— Frédéric Rémy, Commercial Performance Director at Capifrance
FAQ - Frequently Asked Questions
How is the capital gain on an inherited house calculated?
It is the difference between the sale price and the value of the property declared in the estate, reduced by allowances for holding period and eligible deductible expenses.
Does the deceased's holding period count for the heir?
Yes, the date on which the deceased originally acquired the property is used to calculate the holding period, which can allow the heir to benefit immediately from substantial allowances, or even a full exemption.
When is the capital gain fully exempt?
The exemption is total for income tax after 22 years of ownership, and for social contributions after 30 years of ownership.
Can you avoid taxation if the heir lives in the inherited property?
Yes, if the property becomes the heir's main residence before it is resold, the capital gain is fully exempt, regardless of the holding period.
Which costs can reduce the taxable capital gain?
Transfer duties related to the estate, certain notary fees, and works that are documented or assessed on a flat-rate basis can increase the acquisition value and therefore reduce the taxable capital gain.
Also on the blog
- Selling a house received through inheritance: advice and best practices
- Do works invoices reduce capital gains tax on property?
- Estate and surviving spouse: selling a house after a death
Author
Frédéric Rémy – Director of Sales Performance
A real estate professional with several years of experience within the Capifrance network, I would like to share essential advice with you to help you successfully complete your property project with our advisors.
