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A Guide to Capital Gains Tax on Private Residential Sales in France


CAPITAL GAINS TAX February 2021

This article is one of a series that has been provided to France Property Angels by SAREG. SAREG provides bi-lingual services in accountancy, international businesses and investments and has team of English-speaking staff to assist with your needs. Please visit sareg.com to find out more.

Below is a summary of Frech Capital Gains Tax as it might apply to France Property Angels clients. 


PRIVATE INDIVIDUALS & RESIDENTIAL SALES

The Capital Gains Tax rules have been modified a few times over the past 10-15 years in France and therefore it is important to always check with your notary prior to selling to find out what the current rules are relating to your individual situation.

HISTORY OF CHANGES

-  In August 2013, Hollande’s government reduced the number of years’ ownership for exoneration of CGT on second homes from 30 years to 22 years but maintained 30 years’ ownership for exoneration of social taxes, with rebates applied after the first 5 years of ownership on a sliding scale (see table below).

-  Since January 2015, the rate of Capital Gains Tax has been reduced for non-EU residents and there is now one rate for everyone, whether or not they are French resident, EU resident or non-EU resident!

-  Since 1 September 2014, the same rules of CGT apply to the sale of building land.

-  In 2018 Macron’s government increased the level of social taxes applied (from 15.5% to 17.2%) and in the most recent French Finance Law 2019, voted in December 2018, the government modified the distribution of social taxes for non-residents, depending on their country of residence, giving EU and EEA residents a reduced level of social taxes on capital gain (and property rental income).

WHAT IS A CAPITAL GAIN?

For individuals, the capital gain is calculated according to the difference between the sales price and the original purchase price, taking into account notary and agency fees on the original purchase, as well as any structural renovations carried out by French registered artisans since purchase and the expert’s reports provided for the sale (supporting documentation has to be provided).

Where no records can be produced, a fixed allowance (currently 7.5%) is given for legal fees and if you have owned the property for more than 5 years, a further allowance (currently 15%) is given for improvements.

If your gain (profit) when selling does not exceed 15,000€ you are exonerated from Capital Gains Tax, whether or not you are French tax resident.

For any gain exceeding 15,000€, the following rates apply on the whole gain, less various allowances on the Capital Gains Tax and different allowances on social taxes – related to the number of years of ownership :

1)  RESIDENTS

   a)  PROPERTY = PRIMARY RESIDENCE : 0% = full exoneration from CGT

   b)  PROPERTY = SECONDARY RESIDENCE : 36.2% (19% + 17.2% social taxes)

2)  NON-RESIDENTS EU + SWITZERLAND & EEA: 26.5% (19% + 7.5%* social taxes) *reduced from 01/01/2019

3)  NON-RESIDENTS NON-EU : 36.2% (19% + 17.2% social taxes)

4)  NON-RESIDENTS OFF-SHORE : 36.2% (19% + 17.2% social taxes)

NB For UK RESIDENTS : Since 01/01/2021, UK residents are considered as non-EU residents and therefore the social tax rate of 17.2% applies to any capital gains made on sales completed after 31/12/2020. UK residents will also be required to appoint a tax representative for the sale of their French property (see notes at end of article).

 

EXONERATION FROM CAPITAL GAINS TAX

There are 3 principal ways of being exonerated from Capital Gains Tax :

1) Selling your primary residence
2) Selling a property for less than 15,000€
3) Selling a secondary residence that you have owned for more than 22 years (noting that the social taxes exoneration only starts to apply after 30 years)

There are a few other rare cases where an exoneration may be applied but the conditions to fulfil are complex and strict, including: Selling a second home for the first time, where the second home is used for habitation AND you have not owned the primary residence for a minimum of 4 years preceding the sale AND you must re-use the sales proceeds to purchase another property within 2 years of the sale – the vendor has to ASK for this exoneration (it is not automatic) and it can only be applied once.

Other exonerations include primary residences for the elderly or the disabled who have been placed in care homes, as well as a few other particular cases.

 

TAX ALLOWANCES & SOCIAL TAXES

The following table shows the different allowances on the CAPITAL GAINS TAX (over 22 years) and the lower rate of allowance on social taxes (over 30 years), both calculated on a sliding scale according to the number of years the property has been owned :

Tax Allowances & Social Taxes
No of Years of Ownership Tax Allowance total % Social Taxes Allowance total %
1 year 0% 0% 0% 0%
2 years 0% 0% 0% 0%
3 years 0% 0% 0% 0%
4 years 0% 0% 0% 0%
5 years 0% 0% 0% 0%
6 years 6% 6% 1.65% 1.65%
7 years 6% 12% 1.65% 3.30%
8 years 6% 18% 1.65% 4.95%
9 years 6% 24% 1.65% 6.60%
10 years 6% 30% 1.65% 8.25%
11 years 6% 36% 1.65% 9.90%
12 years 6% 42% 1.65% 11.55%
13 years 6% 49% 1.65% 13.20%
14 years 6% 54% 1.65% 14.85%
15 years 6% 60% 1.65% 16.50%
16 years 6% 66% 1.65% 18.15%
17 years 6% 72% 1.65% 19.80%
18 years 6% 78% 1.65% 21.45%
19 years 6% 84% 1.65% 23.10%
20 years 6% 90% 1.65% 24.75%
21 years 6% 96% 1.65% 26.40%
22 years 4% 100% 1.6% 28%
23 years exonerated - 9% 37%
24 years

 exonerated

- 9% 46%
25 years exonerated - 9% 55%
26 years exonerated - 9% 64%
27 years exonerated - 9% 73%
28 years exonerated   9% 82%
29 years exonerated - 9%

91%

30 years

exonerated

- exonerated -

 

 

 

SINCE 01/01/2013 – ADDITIONAL TAX ON CAPITAL GAIN IN EXCESS OF 50,000€

Since January 2013, an additional tax related to high capital gain was put in place, which is applicable to both individuals and businesses, calculated on the net CGT due after the above allowances have been taken into account.

It is calculated in the following manner :

Additional Tax on Capital Gain in Excess of €50,000

Taxable capital gain :

Amount of additional tax :
From 50,001€ to 60,000€ 2% CGT – (60,000€ – CGT x 5%)
From 60,001€ to 100,000€ 2%  CGT
From 100,001€ to 110,000€ 3%  CGT – (110,000€ – CGT x 10%)
From 110,001€ to 150,000€ 3%  CGT
From 150,001€ to 160,000€ 4%  CGT – (160,000€ – CGT x 15%)
From 160,001€ to 200,000€ 4%  CGT
From 200,001€ to 210,000€ 5%  CGT – (210,000€ – CGT x 20%)
From 210,001€ to 250,000€ 5%  CGT
From 250,001€ to 260,000€ 6%  CGT – (260,000€ – CGT x 25%)
In excess of 260,000€ 6% CGT

 

OTHER CATEGORIES OF VENDOR / PROPERTY

Please note that the above rules apply to sales by private individuals of residential properties and building land only.

* Different rules apply to the sale of professional property and there are also different rates of Capital Gains Tax. For full details relating to these different rules, if relevant to your situation, please contact us for further details.

TAX REPRESENTATIVE
Until 2015, it was obligatory for non-residents to use a tax representative when reselling their French property, for values in excess of 150,000 Euros. However, as this restriction goes against freedom of movement guaranteed by the EU treaty, the French government decided this would no longer be an obligation (from 1/1/2015) for all residents of EU states! So if you are EU resident, you do not need to pay a commission to a tax representative related to the amount of Capital Gains Tax due and the declaration will not have to go through such a representative, it can be dealt with directly by the notary on your behalf.
NB : This exemption is no longer be valid for UK residents since 31/12/2020 as the UK is no longer part of the EU! Please note that SAREG does not provide tax representative services.

 

Please note that the details provided in this information sheet are correct at the time the leaflet has been drawn up but French law is subject to regular changes and we advise that you should obtain up-to-date information when deciding to sell to be sure you have the relevant rates and conditions before selling

 

We at France Property Angels hope that you found this information useful. While you are here why not take a look at our Property For Sale in the Alps and the South of France.




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© Copyright Campion (UK) Ltd 2017.
FRANCE PROPERTY SALES SARL C.P. No CPI 7401 2016 000 004 662