You own an entire building—whether it's a rental property, a former farmhouse that can be subdivided, or a small apartment building—and you're wondering whether to sell it as a whole to a single investor or divide it into individual units and sell them separately. This decision has a significant impact on the final selling price, the time required to complete the sale, and the administrative complexity involved.
In this article, we compare selling a building as a whole with selling it unit by unit, outline the legal requirements for each option, and explain the key criteria that should guide your decision. To accurately assess your property's value under each scenario, an online property valuation is a useful first step before discussing your project with a local real estate professional: your nearby Optimhome real estate advisor.
Summary
Selling a building as a whole transfers the entire property to a single buyer, typically an investor. It offers a faster transaction with lower costs but often results in a lower overall sale price than selling each unit separately.
Selling by individual units involves legally dividing the building into condominium units and selling them separately. This can maximize the property's value but requires more time, administrative procedures, and upfront costs.
Dividing a building into condominium units requires a subdivision description, condominium bylaws, and, for buildings over 10 years old, a global technical survey (DTG).
If the building contains more than five occupied residential units, the Aurillac Act requires tenants to be informed and grants them a right of first refusal before any unit-by-unit sale.
Capital gains tax depends on how long the property has been owned, with full exemption from income tax after 22 years of ownership.
Selling as a whole or selling by units: two different approaches
Selling as a whole means transferring the entire building, without subdividing it, to a single purchaser—most often an institutional investor, property investment company, social housing provider, or property-holding company (SCI) seeking rental income. This option is particularly suitable for occupied rental buildings, owners looking to sell quickly, or those wishing to avoid the complexity of marketing each apartment individually.
Selling by individual units consists of legally dividing the building into separate condominium units and then selling each apartment individually. This strategy is commonly used by investors who first purchase an entire building before increasing its value through individual resales, but long-term owners may also choose this approach directly.
The financial advantages and disadvantages of each option
Selling the building as a whole offers the benefit of a single, relatively fast transaction: one deed of sale, no need to hire a surveyor or commission a global technical survey beforehand, and only one buyer to negotiate with. However, the overall selling price is often lower than the combined value of individually sold units.
Selling by units can generate a higher total sale price, as the combined value of separate apartments often exceeds the value of the building sold as a whole. However, it also involves higher costs and longer timelines, including surveyor's fees (ranging from several hundred to several thousand euros depending on the complexity of the project), the cost of the global technical survey, condominium management setup costs, and a longer marketing period while each unit is sold separately.
Legal requirements for dividing a building into condominium units
Legally dividing a building into condominium units requires several mandatory steps:
Subdivision description (État descriptif de division – EDD)
Prepared by a licensed surveyor, this document identifies each unit, records its measurements, and allocates ownership shares in the common areas. It must be registered with the French Land Registry.
Condominium bylaws
Prepared alongside the subdivision description, the bylaws establish the rules governing the future condominium, including service charges and the use of common areas.
Global technical survey (Diagnostic technique global – DTG)
Since the ALUR Act, any building over 10 years old being converted into a condominium must undergo a DTG before the condominium bylaws and subdivision description are prepared.
Land subdivision
If the division concerns the land itself rather than just the building, French planning regulations apply and may require either a prior declaration or a planning permit, depending on the number of plots created.
Protecting existing tenants: the Aurillac Act
When a building being sold unit by unit contains more than five occupied residential units, the French Act of June 13, 2006 (known as the Aurillac Act) requires tenants to be notified at least three months before any sale offer is made. Each tenant is then granted a right of first refusal to purchase their home unless the purchaser commits to extending the existing leases for a minimum of six years. This legal requirement must be carefully reviewed before any subdivision project involving an occupied building.
Mandatory surveys and documents
In addition to the DTG, several documents are required to secure the sale of a building, whether sold as a whole or by individual units:
- A collective Energy Performance Certificate (DPE), mandatory according to a phased timetable based on the size of the condominium.
- The standard technical survey file (Dossier de Diagnostic Technique – DDT), including the Energy Performance Certificate, asbestos report, lead survey for buildings constructed before 1949, and electrical and gas installation reports where applicable.
- The building information file, which includes the DTG, the collective Energy Performance Certificate, and the building maintenance log.
Capital gains tax when selling a building
For private individuals, capital gains from the sale of a building are subject to income tax (19%) and social security contributions (17.2%), resulting in a combined tax rate of 36.2%. Tax allowances increase according to the length of ownership: income tax is fully exempt after 22 years, while social contributions are fully exempt after 30 years.
Please note that if the sale is carried out as part of a professional business activity, such as a property dealer's business, no ownership allowance applies, and the entire profit is taxable regardless of how long the property has been held.
Choosing the right strategy
Choose to sell the building as a whole if it requires substantial renovation work, if the local market is relatively slow, or if you want to dispose of the property quickly without investing additional funds in subdivision.
Choose to sell by individual units if the building is located in a high-demand area, if each apartment is attractive on its own, and if you have sufficient time and financial resources to cover surveyor's fees and the global technical survey.
Before deciding to subdivide an occupied building, always verify the number of occupied units and review existing tenancy agreements to anticipate the obligations imposed by the Aurillac Act.
Get advice from an Optimhome real estate advisor
Choosing between selling a building as a whole or dividing it into individual units depends largely on the characteristics of your property and your local real estate market. To help you make the right decision, contact your local Optimhome real estate advisor.They can estimate your property's value under both scenarios and connect you with the appropriate professionals, such as surveyors and notaries, to ensure your transaction proceeds smoothly.
FAQ
Is it always more profitable to sell a building by individual units?
Not necessarily. Selling by individual units can generate a higher overall sale price, but subdivision costs and a longer marketing period may offset part of this advantage. A comparative valuation of both scenarios is essential before making a decision.
Can I subdivide a building that is occupied by tenants?
Yes. However, if the building contains more than five occupied residential units, the Aurillac Act requires tenants to be informed and grants them a right of first refusal unless the purchaser agrees to extend existing leases for at least six years.
What is a global technical survey (DTG), and when is it mandatory?
A DTG assesses the overall condition of a building, including its structure, utilities, and energy performance. It is mandatory before converting a building over 10 years old into a condominium and therefore before subdividing it into units intended for sale.
How are capital gains taxed when selling a building?
Capital gains are taxed at a combined rate of 36.2% (income tax plus social security contributions), with progressive tax allowances based on the length of ownership, leading to full exemptions after 22 to 30 years, depending on the tax concerned.
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