French capital gains tax on property sales

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by Muriel Brault:   Notaire Dimplomée:  Cabinet Roche & CIE:

     www.cabinet-roche.com

Note: This article discusses capital gains taxes levied on property owned in the names of individuals (not corporate entities).

Capital gains tax in France is called impôt sur les plus values and is a tax payable on the sale of land or buildings. The capital gain is the difference between the selling price and the purchase price (which is deductible).

How can French capital gains taxes be mitigated?

Acquisition costs can be deducted at their actual cost or for a fixed value representing 7,5% of the acquisition price, also known as closing costs.

The cost of work carried out on the property can be deducted as well, by producing all of the relative invoices of expenses related to construction, reconstruction, improvement or extension work. Otherwise, if you have owned the property for over 5 years you are allowed to deduct a fixed 15% from the purchase price without providing invoices or receipts. (This lump sum does not apply to the value of the land, only the buildings).

There are allowances for holding period too.  Capital gains taxes are reduced the longer one has owned the property.  The calculation of the holding period allowance has changed several times in the past few years. The most recent amendment stipulates two scales:

-the first concerns the income tax (19%): exemption after 22 years of holding

-the second concerns social charges (15.5%): exemption after 30 years of holding

Consequently, the capital gain is completely exempt from tax and social charges after 30 years of holding. Application of the exemption for holding period over time is illustrated in the table below:

      Holding period

Allowance rate applicable each year of holding

Basis for income tax Basis for social charges
Less than 6 years 0 % 0 %
From the 6th to the 21st  year 6 % 1,65 %
22nd year  4 % 1,60 %
Beyond the 22nd  year 9 %

Calculation and payment of capital gains tax

As of January 1, 2015 there is only one tax rate of 19% for all individuals regardless of their place of residence.

The third amended finance Law for 2012 stipulates an additional tax on capital gains realized by individuals. It is payable upon sale, and due on taxable capital gains in excess of € 50,000. This surtax represents between 2% and 6%.

Finally, non-residents have been subject to social charges (15.5%) since 2012. There is substantial legal controversy over the social charges on non-residents, with pressure to exempt non-residents from social charges on capital gains. The calculations are carried out in accordance with Form 2048. The notaire will calculate the tax and social charges payable and deduct this from the sale proceeds before you receive them. 

Example: A property bought 1,900,000 Euros by a non-resident, sold for 3,000,000 Euros after 14 years.

 

CAPITAL GAIN TAX

Sale price

3,000,000

Purchase price

– 1,900,000

Purchase expenses (7,5%) and improvements (15%)

– (142,500 + 285,000) = 427,500

Gross capital gain

= 672.500

 

Capital gains tax (19%)

Social security contributions (15,5%)

Allowance for holding time

9 years x 6% = 54 % → 363,150

9 years x 1.65% =14,85 % → 99,866

Net capital gain following the allowance

309,350  €

572,634 €

Net capital gain

= 309,350

= 572,634

Tax rate

x 19 %

x 15.5 %

Tax

= 58,776

= 88,758

Surcharge

(% of the net capital gain)

+ 18,561

(6%)

Total amount to be paid

166,095

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Top Reasons to Buy in Provence

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Great market conditions

Falling prices, low interest rates and a favorable foreign currency conversion rate…now is the time to buy real estate in Provence.

Location, location, location

The best of all worlds at your fingertips— beaches to the South and skiing in the North.  The Alps, Italy, Spain, Switzerland and Paris all within 1-3 hours by car or train.   Provence’s ideal, central location and easy accessibility to the other hot spots in Europe keep it high on the must-do list for foreigners—making it a very solid investment.

The lifestyle and culture will add years to your life

Living in Provence is healthy in every way— from buying fresh local produce at the weekly outdoor markets to daily to long Sunday walks through hilltop villages and ancient Roman ruins.  Almost everything related to eating and drinking in Provence involves locally made or grown products— from the fruits and vegetables, to bread, olive oil, cheese and let us not forget the wine…need we say more? Net sum—Provence’s earthy lifestyle rooted in all that is natural feeds the body and the soul.

reasonstobuy3

It’s a “Living Investment”

Buying in Provence is an investment that gives us the most precious dividend— time together and memories with family and friends in a region rich in heritage and tradition.  For those looking for additional ROI, the luxury villa rental market in Provence is a thriving business that makes owning in a home Provence a profitable one.

Fabulous weather

With the exception of the odd mistral winds Provence is known for its ideal weather, pretty well all year round.  Springtime brings the sweet scent of poppies and cherry blossoms, summers endless blue skies, the fall sneaks in with a crisp nip in the air and the winters are mild.

reasonstobuy2

Interested in Buying a Property in Provence?

Only Provence has over a decade of experience within the luxury property market in Provence – with a particular focus in the popular villages surrounding the Luberon, Alpilles and Saint Remy areas. We have a vast network of properties for sale in Provence and a wide range of partnerships and bilingual professionals working within the real estate market in Provence including experts in French law, accounting, corporate and legal structuring, and notaries. With our in-depth experience within the region foreign buyers can be confident that they are making a sound, informed decision.

 

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Buying a House in Provence: The first few steps…

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The first few steps…Buying a House in Provence

Perhaps you have been renting a villa in Provence for years, or maybe all it took was one week of its earthly magic to take hold… either way, you can’t seem to shake the idea of having a place to call your own in this idyllic region.  Where do you begin?  It can be intimidating for a foreigner to navigate the ins and outs of the administrative process of buying a property in Provence. France is known for its fantastic wine and cheese, yet also for its maze of paperwork, complex rules, and tax regulations.

What could feel like a daunting process becomes a pleasure when working with the knowledgeable staff in the Real Estate Division of Only Provence, all of whom have first-hand knowledge and experience buying, renovating and renting properties in the region.

Criteria

If you are thinking of purchasing in Provence, here are a few helpful criteria to consider at the outset of your search:

  • What type of property are you looking for?  farmhouse/ country house, village house or newer construction?
  • Do you hope to be walking distance to a village or town?
  • What type of village appeals to you— more active all year round, or quiet and quaint?
  • Are you in need of International schools?
  • Are you prepared to renovate?
  • Will you be considering villa rental for once you have purchased?

When to house-hunt?

Many of Provence’s fabulous properties are rented during the peak summer weeks between May and September, or are occupied by the owners themselves.  We suggest carving out a few dedicated days in the low season, either in April or October, when the houses are easily viewed and we can take our time exploring all of the available options for sale with you.  Since many of the properties also function as income producing vacation rentals in Provence, options to stay in the home offer an invaluable opportunity to experience a property first-hand prior to buying.

Matching you with the perfect location

It’s helpful to have an understanding the general lay of the land and the most notable corners of the region.  Inland Provence, excluding the Riviera,  can typically be divided into four main areas

Aix-en-Provence and surrounding areas

The Luberon Moutains

The Alpilles region

Avignon and surrounding areas

Each area within this highly sought after region of France will logically have its own unique spirit and personality.  With decades of combined experience working, living and managing properties in Provence, we can help guide you narrow down your criteria, identifying the right blend of country or village setting with proximity to what it most important to you, be it the quieter lifestyle found near Lourmarin or Goult, or a more lively one near the popular town of Saint Remy.

Are you prepared to renovate?

For many, the dream of owning in Provence involves experiencing some of what Peter Mayle describes with such candor as moves into a 200-year-old stone farmhouse in the Luberon.  It can be viewed almost as a right of passage when purchasing in Provence.  But for others, the priorities involve bypassing the time and patience required to navigate renovation to get on with the beauty of simply living there.

Whatever the visions are for owning your own slice of heaven in Provence, Only Provence is happy to guide you to your home.

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Only Provence Expands Operations To Include Real Estate For Sale In Provence

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Los Angeles, California based company Only Provence has recently announced an expansion. As one of the leading providers of luxury villa rentals in Provence, France, the company is now expanding its operations to include real estate sales.

Real Estate For Sale Provence

For the past decade, Only Provence has focused uniquely on carefully growing its portfolio of distinct luxury vacation properties, which is now a collection of well-over 160 properties located near Provence’s most notable villages. Known for their high standards and only accepting homes with the ideal balance of authenticity, charm, amenities and staff, Only Provence is proud of its “best in class” reputation in Provence. They state that moving ahead into selling properties is something that has always been in the back of their minds, from the very beginning.

John Dean, the company’s founder, adds, “The move into real estate market was a natural one. The relationships we have developed over the past decade and the experience we have in luxury property obviously lends itself to real estate sales of these villas. This is something we have wanted to do for some time until now, yet the market conditions were not ideal. Now with strong foreign currency and a buyer’s market, the timing is simply right.”

Expansion seems to be in the company’s ethos. Soon after launching 10 years ago, Only Provence began coupling vacation rentals with high quality, local experiences such as wine tastings, cooking classes and truffle hunting. The company now has the largest network of regionally renowned regional chefs to cater to their ever growing upscale clientele.

“With higher stock markets, and a strengthening dollar vs. euro, Only Provence villa clients want to own their very own piece of paradise in Provence. The administrative process of buying a property in France can be intimidating to a foreigner. This is where we come in. We are happy to share what we learned ourselves many years ago,” states Dean.

Real Estate For Sale Provence

More about Only Provence can be seen on their official website at http://www.onlyprovence.com. Those interested in looking at the properties in Provence that the company currently has available can see a complete listing at http://www.onlyprovence.com/provence-real-estate-sales.

Source: https://www.pressadvantage.com/story/4737-only-provence-expands-operations-to-include-real-estate-for-sale-in-provence

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