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Please read our new important post on Capital Gains Tax posted on the 21st of October 2013: “French Parliament backs capital gains tax reform on property…but further changes not excluded for properties owned more than 22 years”
You may also now download a tax calculator on the “useful tools” page of our website: http://www.alps-property-france.com/#!useful-tools/cl5u. After our latest blog on the wording of the reform “Capital gains tax on French property: latest updates and calculation (part 1)”, let’s now have a look at numbers. Ok sure, numbers and spreadsheets are terribly boring, however they can be very useful to factor the consequences on the tax that you may have to pay! So below, we have a look at the consequence of the reform on a 90 000 euro capital gains whether you have owned the property for any period of time from 1 year to 30 years!
- 1/ The first spreadsheet shows what you have to pay if you sign your “acte de vente” (final contract at the notaire office) before the end of this month (31/08/2013) under the current tax rules
- 2/ The second one with the new tax rules implemented from the 1st of September 2013, but without the 25% additional rebate
- 3/ The third one includes on top of the second spreadsheet the additional 25% rebate
- 4/…and the fourth one compares what amount you would have to pay under the 3 different assumptions.
- Tax rate may vary based on residency: the spreadsheet applies for the tax payers resident in one of the EEA countries (European Union + Norway + Iceland). The 19% tax and 15.5% social charges- (plus additional tax above 50 000 euros of capital gains) increases to: 33.33% tax rate and 15.5% social charges- (plus additional tax above 50 000 euros of capital gains…) if the tax payer is residen of a non EEA country, the rate goes up to 50% tax and 15.5% social charges (plus additional tax…) if the tax payer is resident to a non EEA country listed as “non cooperative” for tax matters. Contact us if you are located in a country with tax rate above 19%.
- In each the “2% tax” column is the additional 2% tax when the capital gains amount is above 50 000 euro, after dampening factors, (and when it is the case after the 25% additional rebate). The calculation takes into account the “smoothing” formula between 50 001 and 60 000 euros, this is why it is in fact below 2% within this range. The capital gains subject to the additional tax is assessed based on the number of sellers in case of undivided owners, couple partners, married or civil partners. The calculation takes into account the worst case scenario (one individual seller). Please read the post “Calculator for the September 2013 reform“
- It is a bit of a “theoretical case” to get capital gains if you bought your property during the past 5 years. We will see why in the next blog.
- If we include the 25% rebate, in this particular case of 90 000 capital gains, the amount you would have to pay to the state would be reduced by more than 10 000 euros if you have owned the property for more than 9 years up to 22 years, leading to a reduction in % between 33% to 60%. This is quite significant!
1/The current tax rules (this is a bit small but if you click on it you will see the numbers):
2/The new dampening factors from the 1/09/2013 (excluding the additional 25% rebate):
3/The new dampening factors from the 1/01/2013 including the 25% rebate (the green columns are reported from the previous spreadsheet), it is not very likely that the 25% rebate will apply the first 5 years, although it is included in the spreadsheet, therefore the first 5 years are more likely to look like the calculation in spreadsheet number 2
4/The comparison of the 3 preceding spreadsheets: