Capital Gains tax (plus-value)

[Will]

An article on p80 of the current (May 2005) issue of Living France appears to be rather misleading. It quotes an increase to the rate of plus-value to 27% as from January 2005.

As far as I can ascertain this applies only to French residents selling second homes. Pre-2005 they (we?) paid an effective rate of 26.3%, made up of the 16% basic plus-value rate and an additional social charge. Residents of other EU countries paid just the 16% (less allowances) on the capital gain when selling a French home.

An increase in CSG is responsible to a slight increase in the effective rate for French residents to 27%. The basic 16%, applicable to UK and other European residents, remains unchanged as far as I can tell.

Of course, if anybody has different information we would be pleased to hear from you.

Thanks to a user of our Normandy and Mayenne forum, who was rather alarmed by the possibility of getting a much larger than expected tax bill, for drawing this to our attention.

[Will]

Further to the above, the lady from the other forum says that, wanting to put her mind at rest, she spoke to the secretary of the author of the article in Living France and as a result she is sure that the 27% capital gains tax applies to anybody selling a maison secondaire, not just French residents.

I'm still rather doubtful abut it - I feel that if this is the case then such a large increase would have been more widely publicised. 

Even so, this is something that anybody contemplating selling a house in France needs to be aware of. The article in question is by Virginie Delplace of Kingsfords solicitors, written in response to a reader query. It can be found on p80 of the May issue (which arrived here in France today).

[Teamedup]

I've never understood why foreigners should have had a huge fiscal advantage where this is concerned. Maybe they should bring it down a little and tax everyone the same.

[Tonyb]

[quote]Further to the above, the lady from the other forum says that, wanting to put her mind at rest, she spoke to the secretary of the author of the article in Living France and as a result she is sure tha...[/quote]

I'm afraid that article is clearly wrong. I'm in the process of selling in France and the rule is:

Capital Gains tax: 16% for all EU members; 33% for non EU members.

Social Charge: an additional 11% National Insurance/Social Charge for French residents only. NB this has risen from 10% in January this year so this may have given rise to the confusion.

Therefore Brits who are UK residents with a second home in France pay 16%;

French citizens pay 27% in total, everyone else pays 33%.

I hope this clears things up!