Roche & Cie

Possible exemptions to escape the capital gains tax on real estate

01 Apr 2016

The real estate gains are taxed at the flat rate of 19% after abatement for holding period. There are a number of exemptions. Besides that of the principal residence, other situations are used to avoid these taxes. Here are the situations.

1. Sale of the main residence, regardless of the amount and the holding period of the property.

2. Disposals for goods of low value, the sale price is less than or equal to 15,000 euros. This ceiling is assessed by good and not annually.

3. First transfer of any other dwelling than the principal residence, provided that the transferor was not the owner’s principal residence (directly or through an intermediary) during the 4 years preceding the sale, and he re-used within 24 months, the sale price in the acquisition or construction of housing that will be his main residence upon completion or acquisition, whichever is later. If the entire sale price is not reinvested, then the exemption will be limited to the fraction of effectively reused sale price.

4. First land transfer conducted by a non-resident (But a national of the European Economic Area or enjoying a clause of non-discrimination) which has been fiscally domiciled in France for at least two years before the sale. For 2016, the exemption is capped, under terms to 150,000 euros.

5. Disposals by elderly residents in nursing homes (or disabled adult persons in nursing homes) of their principal residence when it occurs within two years of entering the establishment and the residence has not been occupied since. To benefit from this measure, the taxpayer should not be subject to the solidarity tax on wealth or having a tax reference income exceeding 25,005 euros (plus depending on the family quotient shares).

6. Disposals by holders of a pension or a disability card, if they are not liable to wealth tax and that their income is below 10,633 euros (plus depending on the family quotient shares) .

7. Disposals for which a declaration of public interest was issued for an expropriation. The exemption of the capital gain is subject to reinvestment of compensation in the purchase, construction or expansion of one or more buildings.

8. Disposals of property made between January 1, 2014 and December 31, 2016, directly or indirectly in favor of an agency in charge of social housing.