Selling: Capital Gains Tax
Oft tinkered with by the administration these past years, capital gains tax (CGT) is unavoidable. This financial hit affects all an owner’s real estate holdings other than their principal residence.
So a few years ago you bought a property and now you want to sell it? Nothing is stopping you from doing so, but you’ll have to pay your dues to the State, especially if this property isn’t your principal residence. Capital gains is almost always in the picture as a result of increasing property prices these past 15 years.
In the case of the sale of a property (aside from a principal residence) held for less than 22 years, all owners must pay CGT to the tune of 19% plus social charges (“CSG” and “CRDS”) of 15.5%. Thus, the financial hit totals 34.5% (19% + 15.5%). For ownership of between 22 and 30 years, the sale is exempt from CGT however, the obligation to pay social charges still stands (15.5%). It’s only until you exceed ownership of 30 years that the owner is no longer taxed.
The owner-seller is subject to this tax in the event of a sale of property (apartment, house, piece of land), the sale of rights associated with property (easements), or in the case of the sale of shares in an SCI (not subject to corporation tax).
Two sorts of exemptions are possible, those linked to property type and those linked to seller profile.
- The type of the property. The following types of property are exempt: principal residence, a sale inferior or equal to €15,000, the sale of rights to build additional stories, repossessed properties, and sales made for the benefit of social housing organisations.
- Seller profile. The following people are tax exempt: pensioners or those holding an invalidity card, handicapped adults.
- For agreements to sell a piece of land for construction signed before the 31 December 2015, the seller is entitled to a 30% exemption on capital gains and social charges.
- Since 1 September 2014, the scale against which capital gains on pieces of land for construction is calculated has been pegged against that for buildings. From now on, the exemption applicable to CGT on land for construction applies after ownership of 22 years or more, and for social charges, after 30 years.
- Until 31 December 2016, an exceptional allowance of 25% on capital gains applies to certain buildings located in urban development zones (« zones urbaines sensibles » (ZUS)).