Good news for the French real estate sector - lower property capital gains tax will help stimulate the market.
In actual fact, the methods for applying property capital gains tax have changed for sales made after 1 September last year.
Since this date, capital gains have in fact been subject to a fixed levy for tax on income earned (impôt sur le revenu) of 19% and 15.5% on social charges (prélèvements sociaux).
Allowances are henceforth as follows :
For tax on income earned :
- 6% for each year owned after the fifth year up to the twenty-first ;
- 4 % for the twenty-second completed year of ownership ;
Full exemption from property capital gains tax on income earned will therefore be achieved after twenty-two years of ownership instead of thirty since 1 February 2012.
For social charges :
- 1.65% for each year owned after the fifth year and up to the twenty-first ;
- 1.60% for the twenty-second year of ownership ;
- 9% for each year after the twenty-second.
Complete exemption of real estate capital gains from social charges will therefore still be achieved after a period of ownership of thirty years.
Secondly, for sales between 1 September 2013 and 31 August 2014, a one-off allowance of 25% is applied to determine the taxable amount of CGT on income and social charges resulting from the sale of real estate or rights affecting these properties other than building plots or associated rights.
This decrease in taxation should encourage owners of second homes to place properties on the market, or put them back on, that they had withdrawn from sale for tax reasons.
This will also have a calming effect on negotiations, with purchasers and vendors being on equal footing in negotiations where vendors save on tax and the market is more attractive for purchasers.
Jean-Marie ROLINRetour ligne manuel
De Laverne ConsultingRetour ligne manuel
’Luxury Search Properties’Retour ligne manuel
CEO and Founder Retour ligne manuel
+ 33 6 7828 9166
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