CAPITAL GAINS

When selling property in France there are taxes payable on the capital gain made between the time of purchase and the time of sale. On September 7, 2011 a second draft of the new finance Act was adopted bringing substantial changes to the capital gains tax regime as part of austerity measures.

EXEMPTIONS

There are five categories which qualify for exoneration

  • The sale of a principal residence, if the owner is a tax payer in France and has owned the property for at least a year.
  • The sale of a house by a member of the EEC which is not a principal residence, on condition that the owner has been a fiscal resident in France for at least two consecutive years leading up to and including the date of sale.
  • The sale of a property which the seller has owned for more than 30 years.
  • The sale of a property for less than 15 000 Euros.
  • The sale of a property by a registered disabled person or a retired person on condition that their income and assets meet a range of criteria.

CALCULATIONS

If capital gains are due they are calculated by taking the sale price and deducting:

  • Agency fees.
  • Costs of all obligatory searches.
  • The cost of lifting any mortgage.
  • The purchase cost of the property including costs of purchase. (These are calculated at a flat rate of 7.5%).
  • Work done to the property which meets various criteria and which can be justified by official receipts. Alternatively, if the property has been owned for over 5 years a flat rate of 15% of the purchase cost can be deducted without producing any formal justification.

The amount payable is then calculated on this figure. The rate of taxation is 19%. For French tax residents social charges are added bringing the total 32.5%.

DEDUCTIONS

No discount will be applicable in respect of the first five years of detention.

From the 5th year (between 6 and 17 years), a discount of 2% is applicable per year of detention.
From the 17th year (between 18 and 24th year), a deduction of 4% is applicable per year of detention.
From the 24th year (between 25 and 30ans), a discount of 8% is applicable per year of detention.
After a period of detention of 30 years or more the sale of the property will be exempt from taxation on capital gains.

The notaire deducts the amount due at source and handles the required declaration to the authorities.

Non residents are required to appoint a professional tax representative to handle filing the required tax declarations and provide required guarantees.