Capital gains tax is one of those contentious issues that confronts property owners when they want to sell; nobody likes to pay it but CGT is pretty much embedded in the tax structure of every developed country. In the case of British expats who own property in France, there has been another change in tax law that will afford considerable relief to those who want to sell up but have been holding on because of the tax bite.
In February last year the French government made a change in tax laws that doubled the length of time a property had to be held in order to avoid paying CGT on sale, from 15 years to 30 years. However the intent to increase revenue didn’t succeed as hoped and instead appeared to be having a negative effect on the French property market, so the current administration under Francois Hollande has knocked the required interim back to 22 years.
According to french-property.com, the change will be effective on sale contracts signed as of September 1st, the rate of taxation will be reduced by 5% for every year of ownership after the first two years, and sellers will be completely exempt from CGT after 22 years.
Though most economists don’t expect the move to have a major impact on France’s property market, it is good news for both British and French expats who want or need to sell their property, as the tax also applies to property in the UK owned by the French. An example is the French owner of a property in Devon who wants to sell up after 25 years but faced a tax bill of around £70,000 if the old 30-year law were still in place.
Tax laws as a rule are best left to the experts whose business is keep up with the latest changes and to interpret them to the best advantage of their clients; if you’re uncertain and there’s a substantial amount at stake, get advice from a qualified tax consultant.