Changes to French capital gains tax on second homes


Since January 2015 capital gains tax (CGT) on second homes in France has been reduced to 19% instead of 33.3% for all non European residents bringing it in line with the CGT for residents of European countries including French residents.

The way CGT is calculated in France is that the 19% ‘tax’ component decreases with time from the 6th year onward to a complete exemption after 22 years, while the 15.5% ‘social charges’ component decreases slowly from the 6th to the 21st year and more rapidly after, up to a total exemption after 30 years of ownership of your French house or flat.

In addition, the ‘social charges’ component of 15.5% is being  challenged and  the European court of Justice should reach a decision during 2015. If the court considers that non tax resident who own a property in France should not pay the 15.5%, the French state might have to refund the non-resident tax payers. It is, therefore, very important that you keep your tax role, wherever you live whether in a European country (except France) or a not.

There is no CGT if your home in France is your main home where you live permanently as long as you are a French tax resident. If you do not live in France and/or do not pay your main income tax in France you are a non resident and therefore you are liable to pay CGT when you sell your French home. If you are a tax resident of a European country, you may benefit from a CGT exemption on up to 150 000 € of capital gains under specific criteria. Please note that financial and tax laws in France are constantly changing so it is vital to take professional advice.

As ever, I would always recommend having a professional on your side when buying and selling property in France. If you would like to talk through your purchase in France, please get in touch;

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