It is proposed that from 1 September 2013, in a bid to stimulate the property market, the gains on second homes will attract full exemption from tax after ownership of 22 years, rather than the current level of 30 years, introduced under President Sarkozy in February 2012.
Since that date, property sales have fallen even further than the market expected, as sellers opted to avoid paying capital gains tax by holding on to their properties and hoping for better times.
This reduction in the “holding” period to 22 years will be particularly welcomed by those facing larger gains which, from 2013, attract a surcharge of up to 6% over and above the base 19% tax + 15.5% CSG/CRDS.Conversely, holding on to prime building land is likely to cause tax issues as the French Government seeks to release land with building potential on to the market in order to stimulate development and jobs. The detail of this initiative will be included in the 2014 Finance Bill.
If you are considering selling a second property situated in France, contact us for advice on optimising the tax position on the proposed transaction.