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The 2015 French Finance Law may have a significant impact on land market (with building rights):

1. Capital Gains Tax (CGT, or “impôt sur les plus-values” in French) on land with building rights has been aligned to CGT on homes.

2. There is an additional rebate of 30%, leading to a very significant reduction of CGT

3. This may boost the number of land transactions with building rights

4. This tax reform (1.) is retroactive from the 1st of September 2014 (date of the “compromis de vente” or preliminary acquisition contract). The additional 30% rebate (2.) is only until the 31st December 2015…

5. The French Finance Law has been definitely backed up by the French Parliament and approved by the French Constitutional Court (“Conseil Constitutionel”)

In the chart below, you can see the CGT (vertical axis) depending on the number of years the landlord has been the owner of the land (horizontal axis). The green line is the CGT before the reform (so before the 01/09/2014), the red line from the CGT from the 01/09/204 to the 31/12/2015. GCT building lands The new CGT (red line) is 30% lower during the first 5 years, more than 40% lower after the 12th year and more than 50% lower after the 16th year compared to the CGT before the 1st of September 2014. The drop is undoubtedly very significant. This positive reform is coming after a period of opposite trend from the French government who until 2013 was willing to increase significantly the CGT on lands with building rights, (however the French Constitutional Court systematically repealed these attempts). The new CGT is similar to the CGT calculation for already built home. As a reminder the CGT on homes benefited from an additional 25% rebate between the 1st of September 2013 until the 31st of August 2014, however the French government decided not to extend the 25% rebate for a longer period beyond the end of August 2014. We can therefore assume that this will likely be the case for the 30% rebate on lands with building rights. Therefore there is likely to be a significant number of landlords who may offer their land on sale, unlocking opportunities for buyers. The additional 30% rebate is granted if: a) The preliminary contract (“compromis de vente” please see our post on this subject ) is signed at any time between the 1st of September 2014 and the 31st of December 2015 b) The final contract (“acte de vente”) is signed at the latest the 31st of December of the second year following the year the preliminary contract (“compromis de vente”) was signed. During your acquisition process, it is good to have in mind the reduction of CGT that the landlord may get before the end of 2015, especially if you get closer to the final deadline of 31st of December 2015… However, you should count with: 1. the time for getting the planning authorisation to build your house, which is delivered by the mayor (the “Maire”) of the “commune” where the land is located. The timeline for delivering the planning permission is legally 2 months, however it can last longer, 2. additionally, the authorisation can be contesting within 2 months following the authorisation granted by the mayor. 3. The “compromis de vente” generally include several caveats (“conditions suspensives”) one of which is related to the delivery of the planning permission and the expiring of 2 months for contesting the authorisation. This has to be taken into account in your timeline… 4. Additionally, before asking for the planning permission, you should ask a qualified architect to draw the plan for your future home. There are strict regulation, specifically on energy efficiency, that would preferably require the expertise of an architect. In theory the 30% rebate timeline (see a) & b) above) should give plenty of time to get your final planning permission including the expiration of the 2 months for potential challenge of your rights. However, some “communes” and mayor, may sometimes be particularly slow and may ask you to modify your projects to get the authorisation, so you should always follow the process very closely, even if you have a representative in France who may help you for the admin work… The land saller may not grant you additional time, as he would not get the additional 30% rebate.