We were delighted to see so many people at the French Property Exhibition over the weekend.

We have had many positive enquiries and are looking forward to helping our clients to find their Dream Property

There have been some recent important changes in French Tax Law. The Law 2011-900 dated 29thJuly 2011 amended the 2011 French budget and brought several measures as part of the “austerity plan” voted by the French parliament to reduce the French debt. One the main decision concerns Wealth Tax. A further decision was recently made (6^th September 2011) regarding property owners and Capital Gains Tax.

1 – Wealth Tax

The current threshold of €800,000 was increased to €1,300,000 with a simplification regarding taxation from 1^st January 2012. Only two rates will apply ne for those who owns between €1,300,000 and €3,000,000 and one for those who own more than that.

Rates will be as follow

Estate below €1,300,000  = 0

Estate between €1,300,000 and €3,000,000 = 0,25%

Estate exceeding €3,000,000 = 0,50%

There will be some relief for estates between €1,300,000 and €1,400,000 and €3,000,000 and €3,200,000.

The French government decided to maintain the exemption from wealth tax for non French assets for the first 5 years when a non resident decides to elect residency in France.

2 – Capital Gains Tax

The current regime allows an owner to benefit from exemption of Capital Gains Tax in France after owning a property for more than 15 years. Within this period the resale of the property will attract payment of Capital Gain Tax with different tax relief,

At the present, after the fifth year of ownership a reduction of 10% on the gross gain applies each year until the fifteenth year and the net gain is taxed at a flat rate of 19% for non French residents.

From the 1^st February 2012 the rules will completely change and bring in a new system, which will be less attractive for property owners. Indeed, the exemption will be postponed till the end of a period of ownership of 30years and the threshold after the 5^th year of detention will be considerably reduced. So someone who has already owned a property for fifteen years will now be taxed on the gain

The new regime will apply as follow

Resale within five years of acquisition: payment of 19% on the gain

Resale after 5 years:

Reduction of 2% per year of ownership from 6^th to 17^th years

Reduction of 4% from 18^th to 24^th Year of ownership

Reduction of 8% from 25^th to 30^th year of ownership.

The additional reduction of 1,000€ on the gain when reselling the property should be maintained and we have not heard of any modification regarding the allowance of 15% regarding work after 5 years.

Visit us on stand 55 at the Olympia French property show – 23rd – 25th September 2011.

Gironde: the largest department in Metropolitan France

Fly to Bordeaux to explore this beautiful region with its vineyards, sandy beaches and chateaux.

http://www.latitudes.co.uk/articles/NewsletterSeptember2011.pdf