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January 2015, very important update on capital gains tax when you sell your French second home:
- the “tax” component of the capital gains tax (CGT) on French second home is now 19% instead of 33.3% for all tax residents of a non EEA country since the 1st of January 2015.
- Therefore the rate is now the same as for the tax residents of EEA including France (EEA=European Union + Norway+ Iceland). Overall CGT rate including the social benefit charges (named “CSG” and “CRDS” in France) is 34.5% for all taxpayer whether they live in France or anywhere else in the world
- This was officially voted by the French Parliament at the end of December 2014.
- As a reminder, the 19% “tax” component decreases with time from the 6th year onward to a complete exemption after 22 years, while the 15.5% “social charges” component decreases slowly from the 6th to the 21st year and more rapidly after, up to a total exemption after 30 years of ownership of your French house or flat.
- However, the “social charges” component of 15.5% is being challenged and the European court of Justice should conclude on the case during 2015. If the court considers that non tax resident who own a property in France should not pay the 15.5%, the French state might have to refund the non resident tax payers, therefore it is very important that you keep your tax role, wherever you live whether a EEA country (except France) or a non EEA country.
- There is no CGT if your home in France is your main home where you live permanently, but if you live permanently in France you have to be a French tax resident, if you do not live in France, and do not pay your main income tax in France you are a non resident, and therefore you should pay the CGT when you sell your French home
If you are a tax resident of an EEA country, you may benefit from a CGT exemption on up to 150 000 € of capital gains under specific criteria, please read our post “Parliament extend capital tax exemption for non resident on French second home”
Please see our post “capital gains tax calculator for French second home” You may find the official legal document in the following link: www.legifrance.gouv.fr