Capital Gains on Land: How Land Appreciates in Value and How Those Gains Are Taxed
By Thibaut Guéant, co-founder and CIO of LandQuireUpdated on 11-minute read
Table of Contents
- What is the capital gain on a piece of land?
- What causes the value of a piece of land to increase?
- By how much does the value of land increase in the United States?
- Example: Capital gains on land purchased, developed, and then resold
- How is the sale of land taxed in France?
- What if the property is located in the United States?
- Invest in Real Estate Appreciation with LandQuire
- Frequently Asked Questions
The capital gain on a piece of land is the difference between its sale price and its acquisition cost, including expenses.
In France, it is subject to a 19% income tax and 17.2% in social security contributions, with a tax exemption that does not apply until the sixth year of ownership.
In the United States, a parcel of land generally increases in value when its status changes: zoning, subdivision plan, or utility infrastructure.
In Texas, an acre of farmland was worth $2,440 in 2022, compared with an average of $373,800 for land under a single-family home.
In a nutshell
- Capital gains on real estate for a French tax resident are taxed at 36.2% before any deductions: 19% income tax and 17.2% social security contributions (service-public.fr, April 2026).
- The holding-period deduction begins in the 6th year: income tax exemption after 22 years, full exemption after 30 years (service-public.fr, April 2026).
- The first sale for consideration of vacant land that has become buildable is subject to a 5% tax, or 10% if the capital gain exceeds 10 times the land's cost (service-public.fr, January 2024).
- For property located in the United States, the capital gain is taxable there; France credits the U.S. tax against its own tax, up to a certain limit (Public Finance, impots.gouv.fr).
- U.S. farmland is valued at an average of $4,500 per acre in 2026, and $3,100 in Texas, up 4.4% year-over-year (USDA, July 2026).
What is the capital gain on a piece of land?
The capital gain on a piece of land is the profit realized upon its sale: the sale price stated in the deed of sale, minus the purchase price stated in the deed of purchase.
Before deductions, this is referred to as gross capital gain.
The purchase price is increased by closing costs, either based on actual expenses or a flat rate of 7.5%, according to the service-public.fr fact sheet on capital gains from real estate.
Market Capitalization or Valuation Premium?
Two factors drive the appreciation of land value. Market appreciation follows the region’s real estate market, at a rate of a few percent per year.
The increase in value stems from the work done on the ground: a field that was previously used for agriculture and is now zoned for construction changes its classification—and its value.
What causes the value of a piece of land to increase?
Six factors determine the value of a piece of land in the United States, four of which can be influenced.
Our guide toreal estate investing in the United States puts these properties into the context of a project.
| Factor | What's Changing | Who decides? |
|---|---|---|
| Location | Distance to jobs, roads, and schools | The Market |
| Demand for Housing | Number of households looking for a home in the county | Demographics |
| Zoning | Permitted Use and Density: Land zoned for single-family homes and commercial businesses | Zoning Commission, followed by City Council |
| Permissions | Approved subdivision plan, validated studies | City or county |
| Utility Connections | Roads, Water, Sewer Systems, Electricity | Network providers, then developer |
| Batch processing | Number of lots a developer may sell | Approved plan, surveyor |
The Housing Market and Demand for Housing
Texas gained 391,243 residents between July 2024 and July 2025, and Florida gained 196,680, according to a January 2026 press release from the Census Bureau.
Around major metropolitan areas, it is the surrounding counties that are growing the fastest, especially in Texas, according to the Census Bureau's press release on counties.
Zoning and Permits
Land classified as agricultural cannot be developed.
Residential zoning, followed by approval of the subdivision plan, makes the land suitable for construction and specifies what a builder may construct.
This is the step that creates the most value, even before construction begins: it eliminates uncertainty for the next buyer.
Our article on land entitlement details the steps and deadlines involved.
Utility connections and lot subdivision
With connections to water, sewer, and electricity, and access to a road, the lot is now ready for construction.
Our guide to subdividing a plot of land provides details on this subdivision.
By how much does the value of land increase in the United States?
U.S. farmland was worth an average of $4,500 per acre in 2026 (up 3.4% from a year earlier), according to the USDA’s *Land Values 2026* report.
In Texas, the average is $3,100 per acre (+4.4%). One acre is approximately 0.4 hectares.
The FHFA, a federal agency that oversees housing finance, estimates the value of the land beneath single-family homes.
Its data on residential land prices cover 2022, the most recent year for which figures are available:
| Value of an acre in Texas in 2022 | Average | Report on Agricultural Land |
|---|---|---|
| Farmland, Texas average | 2 440 $ | – |
| Residential lot, McLennan County (Waco) | 103 500 $ | × 42 |
| Residential lot, Guadalupe County (Seguin) | 158 800 $ | × 65 |
| Residential land, Texas average | 373 800 $ | × 153 |
Sources: USDA (July 2026); FHFA, Working Paper 19-01 (June 2024). Value of the land alone, under existing homes.
Why this difference does not represent net added value
Unlike undeveloped land, a lot with a house on it already has the necessary permits, road access, and utility connections, and part of the lot is taken up by streets.
The spread covers these expenses, delays, and risks: the profitability of a transaction is much lower.
The share of land costs in home prices is rising: 29.5% of the value of a single-family home in Texas in 2022, compared with 26.2% in 2012, according to the FHFA.
LandQuire is only involved in part of this process: it resells its parcels once they have been approved, before construction begins.
Example: Capital gains on land purchased, developed, and then resold
LandQuire has completed 50 projects, 37 of which have been sold. Five investment portfolios have gone through the entire process: acquisition, development, and resale.
Their investor ROI measures the profitability of realized capital gains: profit received relative to capital, after sharing profits with LandQuire.
| Portfolio | Length of Detention | Investor ROI |
|---|---|---|
| Abbott, Texas (Hill County) | 12 months | 12% |
| Deschutes, Oregon | 19 months | 13% |
| Yuma, Arizona | 29 months | 28,38% |
| Wake Village, Bowie County, Texas | 31 months | 34,55% |
| Montgomery, Ohio (Hamilton County) | 41 months | 9,93% |
Source: LandQuire's registry of sold projects.
Not all projects generate a capital gain: LandQuire abandoned four projects during the due diligence phase and sold two at a slight loss. See our sold real estate projects.
How is the sale of land taxed in France?
Capital gains realized by an individual residing in France upon the sale of land are subject to the real estate capital gains tax regime: a 19% income tax (IR) rate.
Social security contributions (PS) remain at a rate of 17.2% in this case, compared with 18.6% in general, according to the service-public.fr fact sheet on social security contributions.
The application of holding-period deductions does not begin until the sixth year, with a rate specific to each tax assessment:
| Length of Detention | Annual tax deduction, income tax | Annual deduction, PS |
|---|---|---|
| Up to 5 years | 0% | 0% |
| From the 6th to the 21st year of incarceration | 6% | 1,65% |
| 22nd year of incarceration | 4% | 1,6% |
| From the 23rd to the 30th year of incarceration | Exemption | 9% |
| Over 30 years old | Exemption | Exemption |
Source: service-public.fr, entry F10864, verified on April 15, 2026.
A surcharge of 2% to 6% applies to taxable capital gains on real estate exceeding €50,000, except for sales of building lots.
Calculation example: the sale of a building lot after 10 years
A building lot purchased for €50,000, including fees, is sold for €150,000 after 10 years of ownership:
| Step | Calculation | Amount |
|---|---|---|
| Gross Capital Gain | €150,000 – €50,000 | 100 000€ |
| Tax deduction applicable for income tax purposes | 6% × 5 years (grades 6 through 10) = 30% | -30 000€ |
| Income Tax on the Taxable Base | 70,000€ × 19% | 13 300€ |
| Deduction applicable under the PS category | 1.65% × 5 years = 8.25% | -8 250€ |
| P.S. Regarding the tax base | 91,750€ × 17.2% | 15 781€ |
| Total Due | 13,300€ + 15,781€ | 29 081€ |
Without any deductions, before the sixth year, the tax liability would amount to 36,200€.
The Case of Vacant Lots Designated for Development
A vacant lot that has been made eligible for development through an amendment to the local urban planning plan (PLU) is subject to a tax upon its first sale for consideration.
For this provision to apply, the sale price must exceed €15,000, and the capital gain must be 10 times the purchase price, adjusted for inflation between the date of purchase and the date of sale.
The tax rate is 5% on the portion of the capital gain between 10 and 30 times that price, and 10% on any amount above that. Transfers made without consideration (such as gifts or inheritances) are exempt from this tax.
The notary declares and pays this fee before the deed of sale is registered, according to the service-public.fr fact sheet on vacant lots designated for development.
It does not apply to land that was zoned for development before January 13, 2010, nor to a transfer that took place more than 18 years after the date of its designation.
This tax is linked to the PLU, a French urban planning document.
What if the property is located in the United States?
When a treaty is in effect, capital gains realized abroad are generally taxable in the country where the property is located.
This is what the Directorate General of Public Finance’s webpage states regarding the sale of property located outside France.
As with the United States, the French tax regime also applies, including the deduction for the length of ownership.
Capital gains from the sale must be reported on Form 2048-IMM within one month of the sale.
The U.S. tax is then credited against the French tax, up to the amount of the French tax.
Our article on the France-U.S. tax treaty explains this calculation under the treaty, including when a special-purpose entity is involved.
On the U.S. side: the FIRPTA withholding tax
When a property owned by a foreign national is sold, the buyer generally withholds 15% of the sale price under FIRPTA, according to the IRS webpage on this withholding.
This is only a down payment on federal taxes: see our article on the FIRPTA withholding tax and our guide to federal taxation for foreign investors.
Invest in Real Estate Appreciation with LandQuire
LandQuire, founded in 2021 by Romain Daniellou and Thibaut Guéant, analyzes all 3,143 U.S. counties using an algorithm based on more than 120 criteria.
The team purchases plots of land on the outskirts of growing cities, obtains development permits, and then arranges for their sale to developers and builders.
Ticket, Duration, and Risks
You invest $100,000 per project in a project company with a target duration of approximately 36 months, with no guarantees (expect 5 years or more), and no construction work or tenants to manage.
The costs are included in the project budget; you will receive a report every quarter.
Profitability is not guaranteed: delays or denials of permits, delayed resale, exchange rate fluctuations, and capital losses.
Our page on the risks of real estate investment provides details on these risks. Real estate remains a minor component of one’s overall assets.
Frequently Asked Questions
Is a capital loss on land tax-deductible?
Generally speaking, no. Under the real estate capital gains tax regime, a loss may be deducted from capital gains realized on other properties only in exceptional cases.
Do utility connection fees reduce the capital gain?
Yes. Under this system, road, utility, and distribution fees are added to the purchase price—upon presentation of supporting documentation—and reduce the gross capital gain.
Is the sale of a small building lot subject to tax?
No, if the amount stated in the deed does not exceed €15,000: these sales are exempt, without any deductions, regardless of the length of ownership.
How long does it take for a piece of land to increase in value?
There is no standard holding period: based on their appraised values, the five portfolios sold by LandQuire were held for periods ranging from 12 to 41 months.
Does a plot of land purchased off-market increase in value?
It may be priced closer to its agricultural value, which increases its capital gain. Our article on off-market properties explains how to find them.
Is it better to invest in land or in rental property?
Land doesn't generate rent: its value appreciation comes from resale. Our comparison of land versus rental property puts the two models side by side.
Would you like to invest in the development of a piece of land in the U.S. without having to handle the permits yourself?
Explore our real estate listings in the United States or talk to the LandQuire team to find out if a listing is a good fit for your situation.
This article is for informational purposes only and does not constitute personalized tax, legal, or investment advice. Tax rules are current as of the date of this update.
Past performance is not indicative of future results. All investments involve the risk of loss of principal.
This article is for informational purposes only and does not constitute personalized investment advice. Past performance is not indicative of future results. All investments involve the risk of loss of principal.
About the Author
Thibaut Guéant, co-founder and CIO of LandQuire, founded the company in 2021 with Romain Daniellou. As a land entitlement specialist, he identifies off-market raw land, primarily in Texas, and oversees the process of obtaining zoning permits that make the land buildable before reselling it to developers.
