Capital Gains Tax on French homes is a thorny question, but French mortgages can be used to reduce the capital gains tax bill on the sale of your French homes.
With CGT in the UK news here’s the French position.
If you are thinking of relocating to France, where capital gains are treated differently for tax purposes, Best French Mortgage can organise a mortgage for your French home which will minimise the future CGT.
No CGT is payable to the French government on the sale of a principal residence by a French resident (and taxpayer) whatever their nationality.
For second homes CGT is levied at Current Rates for EU residents with French residents paying a social charges suplement, while non-EU residents are charged a higher rate. The Notaire will collect the tax at the point of sale.
However, tax is reduced progressivel after some years’ ownership, so there can be no tax to pay if you have owned the property for a long time.
The cost of improvements carried out by French-registered contractors can be deducted from the capital gain between buying and selling prices.
French residents also pay CGT on the sale of a second home, wherever it is situated. They too are exempt from capital gains tax on the sale of a second home after a number of years ownership.
The Latest News
French property owners were delighted after the French government decided to back down on its proposed tax increase on second homes.
From September 1 2013, those owning a second home in the country for more than 22 years will gain complete exemption from CGT.
The previous French government doubled the amount of time before second home owners could claim exemption, raising the bar from 15 to 30 years in February 2012.
However, amid concerns that the policy slowed down the property market and reduced foreign currency flows into France, the new French President, François Hollande, said extending the time frame had been a mistake. It has now been reduced to 22 years from September onwards.