On new laws on French capital gains tax. Be aware

Until very recently, capital gains laws here in France allowed any second home to be totally exempt of capital gains tax after ownership of 15 years.  Be aware. This law has recently changed.  As of February 1 2012, you now must have owned your home for 30 years to qualify for this exemption.  If you sell your home and completion date is before this date, you will happily fall within the currently applicable 15 year exemption period.  But if you sell now and the completion date is after February 1 2012, your perceived capital gains and their subsequent taxation are likely to skyrocket.  For more detailed info, check out the website at: http://www.lefigaro.fr/immobilier/2011/09/16/05002-20110916ARTFIG00699-plus-values-immobiliere-faut-il-vendre-vite-ou-pas.php. This is a French hyperlink but if you need any clarifications in English, please don’t hesitate to call us or email us.

Construction, extension or enhancement expenses can be deducted, they must not be for routine maintenance expenses such as redecoration or new carpets. These expenses must have been carried out by registered contractors.
Be aware, work carried out by the individual themselves is not allowable. Also material bought by the taxpayer and paid labour costs are excluded. The cost of materials can eventually be taken into account, but only if you bought land and if you are selling a building. Alternatively, if the property has been held for at least five years, a deduction of 15 percent of the acquisition cost can be claimed in lieu of these expenses (even if no such work has actually been done to the property).

Maxéa’s advice :
As a French property owner you need to keep the following documents without any limitation of time:

    • registered contractors invoices with all legal mentions,
    • All other materials or labor invoices even if they are not allowable today, you never know how laws can change in the next 30 years.
    • copy of bank statements as proof of payment of the above mentioned invoices. No cash payments as you won’t be able to prove them.