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New law for 2013 propert capital gains tax

Posted by jennifer-17581 - Created: 5 years ago
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4 replies (Showing replies: 1 to 4)

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Posted by jennifer-17581 - 5 years ago

I had seen this artilce - so confusing

http://www.frenchpropertyski.com/blog/french-ski-property-2/tax-large-capital-gains-french-property-sales-01012013/

From 2013 a new further rate band of Capital Gains Tax (impôt sur les plus-values) has been introduced where the net capital gain* on the sale of a French property exceeds 50,000€.

The extra Capital Gains Tax (CGT) will be calculated on a sliding scale from approximately 1% of a net capital gain of 50,001€ rising to 6% for a net capital gain of over 260,000€.

This measure is permanent and is on top of the standard CGT rate (currently 19% for French, UK or EEC residents) and the 15.5% social charges.  It will continue to apply in 2014 and subsequent years, until the law changes.

However the French government has introduced a special ‘one-year only’ discount– just for 2013 – allowance against CGT which will help offset the effects of this new extra tax on large capital gains.

This measure will be of most interest to vendors who stand to make a large net capital gain on their French property sale, and is for 2013 only.

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Sales for which a compromis de vente was signed before 07/12/12 are exempt.

Capital Gains Tax (impôt sur les plus-values) is applied to all property sales in France and is only applied to secondary or investment properties Main French residences (ie. the home address that you use on your income tax declaration to the French tax office) are exempt.

 

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Posted by peterbrooke - 5 years ago

Hi JLH

The proposed changes to the taxation of gains relating to building land were also rejected by the Constitutional Council. This was done on the grounds that after taking into account all other taxes and the fact that the gains would be taxed according to the barème scale that applies to income (including the new band of 45%), the tax would be punitive. Unfortunately, however, since the article was rejected in its entirety, so too was the proposed discount of 20% for 2013, in respect of  capital gains tax arising on the sale of a maison secondaire."

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Posted by JLH-220731 - 5 years ago

See this link - now I am very confused from what you are reporting....

http://www.franceleasebacks.com/article/french-property-capital-gain-tax-new-law-from-01-01-2013_F31HwDncBN.html

From the 1st of January 2013, the capital gain tax for second homes and any real estate assets in France (excluding the main residence for which one there is no capital gain tax) will be reduced. The government will set up a further reduction of 20%. This exceptional measure will be maintained for one year, to encourage owners to sell more easily their property in 2013.


HOW DOES IT WORKS?
As a reminder, the capital gain tax (excluding main residences) is rated at 19% during the first five years. By adding to the social security contributions (15.5%), the capital gain tax rate has reached 34.5% in total.


Currently, the owner receives a discount of 2% per year between the sixth and the seventeenth year of ownership, followed by 4% per year beyond the seventeenth year, and finally 8% annually from the twenty fourth year. So there is to a total exemption after 30 years.


During 2013, an exeptional 20% reduction will be added to the current discount. For example, an owner selling his second home after six years of ownership now benefits from a reduction of 22% (20% + 2%). If the sale takes place in the seventh year of detention, the tax rebate will reach 24% (20 + 2 + 2 = 24). And the owner holding his property for at least 28 years will be de facto exempt.

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Posted by peterbrooke - 5 years ago

This is my view on the latest changes:

Property:

The capital gains tax regime relating to the sale of second properties and building land was already reformed in February 2012. Hence, under the current regime, the property must now be owned for 30 years before it is free from capital gains tax and social contributions. For ownership of any lesser period, a system of taper relief applies, as follows:

 2% per annum for each year of ownership beyond the 5th year;

 4% for each year of ownership beyond the 17th year; and

 8% per annum for each year of ownership beyond the 24th year.

An additional tax has now been introduced in respect of gains made from the sale of a maison secondaire (and so does not apply to building land), for cases where the gain exceeds €50,000. The tax will also payable by non-residents selling a property in France.

The additional tax rate is as follows:

Amount of Gain

Tax Rate

€50,001 - €100,000

2%

€100,001 - €150,000

3%

€150,001 to €200,000

4%

€200,001 to €250,000

5%

€250,001 and over

6%

Where the gain is within the first €10,000 of the lower level of the band, a smoothing mechanism will be applied to reduce the amount of the tax liability.

the tax will be due in respect of disposals made after 1st January 2013, unless a compromis de vente had been signed by 7th December 2012.

 

I think you are thinking of the disposal of Financial Assets (like shares etc):

The fixed rate of capital gains tax of 19% is increased to 24% for gains arising from disposals made in 2012. With effect from 1st January 2013, the fixed capital gains tax rate is replaced by taxation at the progressive rates as determined by the barème scale. This applies to gains arising from disposals made with effect from 1st January 2013.

However, a proportional reduction in the progressive tax rate will be applied, which is dependent upon the holding period of the assets, as follows:

Holding Period                                                    Reduction
2 – 3 years                                                            20%
4 – 6 years                                                            30%
7 years plus                                                           40%

The percentage reductions above do not apply to the social taxes rates (currently 15.5%).