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If you are a non resident, there is a specific case when you can be exempted to pay capital gains tax (CGT) on your French home (Art 150 G II 2e of the French general tax code) when the following conditions are met:
1/ You have the nationality of a EEA country (EEA = European Union + Norway + Iceland)
2/ You were continuously tax resident in France for at least 2 years, at any time prior to selling your property
3/The sold property must be your home in France, it means that the property must have been available to you since the 1st of January of the year preceding the sale (i.e.: it must not be rented)
You can only benefit from one CGT exemption by tax payer. Tax exemption might not apply if the property is owned through a company.
Possible extension and limitation of the CGT (Capital Gains Tax):
The French “Assembllee Nationale” (Parliament) has just voted an amendment in the 2014 “Loi de Finance” to grant CGT exemptions for French homes which are being rented as long as you abide by 1/ and 2/. This new measure should be implemented from the 1st of January 2014. On the other hand, the Parliament also voted to limit the exemption to capital gains up to Euros 150 000 (after deducting the rebates for the number of years of ownership and the “exceptional” 25% rebate until the 31st August 2014*). The Euros 150 000 limit would also apply to your French home which is in case 3/. There will be only one exemption by tax payer (whether your French property is rented or not).
However, there would still be a difference between a rented property and a non rented property:
- the Euros 150 000 tax exemption for a rented property would be only valid for up to the 31st of December of the 5th year following your tax residence transfer outside of France
- the Euros 150 000 tax exemption would be valid without time limitation if the property has been available to you since the 1st of January of the year preceding the sale (i.e.: non rented)
January 2015 update: this “sweet” tax rule was fully approved by the French Parliament in December 2013, and is still in place in 2015
You can read the National Assembly amendment (in French) on page 55 of the 2014 “Loi de Finance”:
*Read our posts on CGT reform and CGT calculator: