REDUCING CAPITAL GAINS

[jimboy]

Bonjour, The question is pretty simple.  Please any legal beavers?

I understand that on re-sale of renovation projects one can reduce tax impot for CGT on sale of property when registered french artisans have been used.  The tax on profit is reduced by taking into account monies spent on works.  

I have read that one must wait 5 years to qualify for some kind of reduction on CGT? 

For me it is secondary residence, has been a renovation project for 6-12months and now wish to sell.  As I understand 16 per cent tax is to be paid on re-sale to M. notaire.   A lot of monies have been spent on registered French Artisans who have done a fantsatic job at a fair price.  5%TVA has been paid and hold reciept of all devis for possaible tax reduction.

The value of works is about the same as original property value.  So 50per cent of property is liable for tax on resale if this scenario is true.?

Thanks in advance

 

[Will]

The reduction after five years applies to the diminishing tax liability, i.e. after 5 years it reduces by 10% each year until it becomes zero after 15 years in total. Also, after 5 years you can opt to have the liability reduced by a standard percentage rather than using artisans' bills. This is handy if you do not have receipts or you did the work yourself.

Artisans' bills can be used at any time to reduce the liability. However, not every bill qualifies, the notaire or a tax specialist will tell you what sort of work can be offset. And the bills have to meet certain requirements in the information that is included. Tax is charged on profit, not on resale value.

[George]

[quote user="Will"]

....Also, after 5 years you can opt to have the liability reduced by a standard percentage rather than using artisans' bills. This is handy if you do not have receipts or you did the work yourself......[/quote]

hi Will
This may be a daft question, presumably this means you have to elect one or the other ie in my case there will be a big portion of Artisan work on the roof, but the rest will be DIY.  A case of making a choice?

 

[Will]

Quite right, as I understand it. You opt for whichever is most advantageous.

See http://www.notaires.fr/notaires/notaires.nsf/V_TC_PUB/LOGEMENT-PLUS-VALUES-IMMOBILIERES

[BJSLIV]

But as you only get 15% of the original purchase price to allow for any work you have done yourself, you don't need many workmans bills........

 

The value of works is about the same as original property value.  So 50per cent of property is liable for tax on resale if this scenario is true.?

Purchase Price 50000,  fees 10000,  works 50000,  total cost 110000.

If sold within five years tax at 16% will be payable on any proceeds above 110000. Note the Notaire may disallow some of the works, and if the sale proceeds are greater than 150000 euros the calculations will be referred to an independent guarantor who will charge an additional fee.