CAPITAL GAINS ON REAL ESTATE (EXCLUDING PRIMARY RESIDENCE)

Owners selling their second homes or rental properties today can thank the government. They will pay less capital gains tax, as shown by these simulations carried out with the company Fidroit. The new tax allowance rules are, in fact, significantly more favorable, since it is now possible to be exempt from income tax after twenty-two years of ownership, compared to thirty years previously. Even better, an exceptional 25% allowance applies until August 31, 2014, on both income tax and social security contributions, under certain conditions.

Amount of taxes paid in the event of a capital gain* of €100,000, depending on the length of time the property has been held

In euros
* Selling price less the purchase price and less acquisition costs and any work that may be deducted as a lump sum or based on actual costs.
** The exceptional allowance does not apply in the case of the sale of shares in a SCI (real estate investment company) or the sale of the property to a family member.

INCREASE IN TRANSFER TAXES

Buying property will cost (slightly) more next year. The government will allow local authorities to raise the transfer tax rate to 4.5%, compared to 3.8% currently. Transfer taxes, which also include a 1.2% municipal tax, could therefore climb to 5.7%. They do not include notary fees. This increase is expected to be temporary.

BUILDING PLOTS

Until now, capital gains realized from the sale of building land also benefited from a holding period allowance. From January 1, 2014, this will no longer be the case. The capital gain will therefore be fully taxed at 34.5% (19% income tax and 15.5% social security contributions).

Source: Le Monde