COMPASS IMMOBILIER: TAXATION Part 2 - Capital Gains tax

CAPITAL GAINS TAX

This is paid on the profit earned when a property is sold. The tax is calculated and paid upon completion of the transaction. The sale of the principal residence is exonerated from capital gains tax.

The rate of capital gains tax is 16% for an EU resident; 33.33% for a non-EU resident; and 27% for a French resident. Once property has been owned for more than five years, tapered relief of 10% per annum can be claimed, culminating in exoneration from capital gains tax after ownership for more than 15 years.

Unless property has been owned for more than 5 years, it is only possible to deduct certain renovation and construction costs which have been invoiced by a registered enterprise. After 5 years, 15% of the original purchase price can be offset against the gain to represent such costs where it is no longer possible to prove their actual value. This is applicable regardless of whether any work has actually been done.

There is a one-off exoneration applicable to EU citizens who have been tax resident in France for two years at some point in the past. The property must not be let out in the year of sale in order to benefit from the exoneration. It is now possible to benefit from this exoneration upon a second sale if it occurs more than five years after the first one, subject to conditions.

Copyright All Rights Reserved Victoria Headdon, Compass Immobilier