Capital gain tax calculation for individuals

The capital gain is the difference between the selling price and the acquisition price. (art.150 V Tax Code).

Selling price

• It's the price stated in the act

• Capital charges as well as any compensation paid to the seller (art. 150 VA-II du CGI) (such as compensation for eviction paid by the buyer on behalf of the seller, are added to the price) 

• The following costs, based on written proof, are deducted of the price (art.150 VA-III du CGI) :
  • the VAT paid by the seller at the time of the sale
  • the value of furniture sold with the property (cf § "furniture")
  • the costs paid by the seller (restrictive list)
    • Fees paid to an intermediary (estate agent)
    • Fees paid to an accredited representative
    • Fees related to mandatory certification (asbestos, parasites...)
    • eviction compensation
    • Fees paid to an architect to obtain a permit
    • Fees paid to obtain release of mortgage

• these expenses must have been incurred by the seller and be justified by showing invoices.

Acquisition price

• It's the price stated in the purchase act, or the value stated in the act of donation or in the french deed of inheritance.

• All capital charges as well as any compensation paid to the seller are added to the price.

• Acquisition expenses can be added to the price :

   

  Free acquisition (death, donation)

  • Declaration and deed costs (donation, inheritance, death certificate...), notary and other legal fees
  • Lump sum of 7,5 % is excluded

   

  Paid acquisition : at actual cost or at 7,5% of acquisition price :

  -> Expenses related to the acquisition of the property are deductible at their actual cost :

  • Notary'fees, agency's fees paid by the purchaser
  • Legal fees, VAT paid by the purchaser

  Warning ! The seller has to produce the invoices relative to those fees, and proof of their payment (bank statements).

   

  -> Or a 7,5% flat rate for costs can be applied*, either if it is higher than the actual paid costs, or if you have no proof. *(except in some special cases, notably when it was the seller who payed the purchase costs and notary fees : deed called "contrat/acte en mains")

   

• The costs of the work done on the property are added to the price :

• -> Either for their real cost, by producing all the invoices with legal mentions (art. 289 Tax Code) and proof of payment (bank statements).

   

  Expenses related to construction, reconstruction, improvment or extension works are deductible, with production of invoices and their proof of payment (bank statements).

  Warning : Maintenance, repair, and renovation work can never be deducted from the capital gain calculation. Cost of paid labour is also excluded, like expenses which have already been deducted for income tax purposes.

  The costs of materials can eventually be taken into account, but only if you bought land and if you are selling a building.

   

  -> Or in a 15% lump sum of the acquisition price :

   

  • if the property is sold 5 years after its initial purchase,
  • and if it was not just some piece of land.

Capital gain calculation

-> For the sale signed before the 1st februar 2012, the capital gain obtained is reduced by 10% per year after the 5th year (so from the 6th).
( ! « Per year » means from date to date, not calendar years)
You will be totally exempt from CGT after 15 years of ownership (and you will not have to appoint a tax representative !)

-> For the sale after the 1st februar 2012, the capital gain obtained is reduced by 2% per year  between the 6th et la 17th year, 4% per year  between the 18th et la 24th year, 8% per year  between the 25th et la 30th year. You will be totally exempt from CGT after 30 years of ownership (and you will not have to appoint a tax representative !)

-> The tax rate will stand at :

• 19% if you are fiscal resident of an EU Member country,
• 32,5% if you are fiscal resident in France (19% + 13,5%),
• 33,1/3% if you are fiscal resident outside the EU,
• 50% if you are fiscal resident in an ETNC