Information for Sellers: Paying capital gains tax on your property
Although for most people Capital Gains Tax (plus-value) can be an irrelevance, or fairly simple, in some cases it can be a complex issue.
The tax that you pay is split into two parts:
- Capital Gains Tax: charged at 19%
- Social Charges (Prélèvements Sociaux): charged at 15.5%
The first thing to bear in mind is that if the French property you are selling is your ‘tax residence’ (i.e. the place from where you pay your income tax) you will not pay Capital Gains Tax or Prélèvements Sociaux when you sell it (although you may pay it on a gite or other ‘separate dwelling’ that makes up part of your property.) If you are paying your taxes in the UK and not paying tax in France, you may be liable to pay Capital Gains Tax and Prélèvements Sociaux on your French property when you sell it (if you have made a capital gain.)
If you have any doubt or questions regarding your Capital Gains Tax, book an appointment with your notaire to discuss it.
Tax Exemptions and allowances
There are several exemptions and allowances based on a variety of factors. These range from:
The length of time you have owned the property:
- For the Capital Gains element of the tax there is a tapering time schedule:
- If you owned the property for five years or less you do not get an allowance
- If you have owned the property between six and 21 years you get an allowance of 4% per year
- For the 22nd year of ownership you get the final 4% allowance
- This means that for a property owned for 10 year you would get a 30% discount on the Capital Gains element of the tax, for one owned for 15 years you would get a 60% discount on the Capital Gains element of the tax
For the Prélèvements Sociaux, this tapering time schedule is slightly different:
- If you owned the property for five years or less you do not get an allowance
- If you have owned the property for between six and 21 years you get an allowance of 1.65% per year
- For the 22nd year of ownership you get a discount of 1.6% for this single year
- If you have owned the property for between 23 and 30 years you get an allowance of 9% per year
- This means that for a property owned for 10 years you would get a 8.25% discount on the Prélèvements Sociaux element of the tax, for one owned for 15 years you would get a 16.5% discount on the Prélèvements Sociaux element of the tax
- If the property is of low value
- If the property is sold for €15,000 you do not pay any Capital Gains Tax or Prélèvements Sociaux
- In certain circumstances if the property is being sold due to divorce
- In certain circumstances if you are elderly or disabled
- In certain circumstances if your tax residence is a rented home
Allowable costs and deductibles
It is possible to deduct some costs associated with improving a property when calculating Capital Gains Tax. However ‘general maintenance’ on a property is not deductible so it can be difficult to pin down exactly what is and isn’t eligible. Often this distinction is down to each individual notaire to define. This will also be checked by the French tax authority. There are, however, some general rules:
DIY work is not eligible for deductions
Only work carried out by a (usually) French registered building professional is eligible for deductions
You will need to provide invoices for this work and often bank statements showing payments
If you have been granted tax relief on an ‘improvement’ in the past (e.g. on installing energy conservation to your home) you are unlikely to receive tax relief again at this stage