Yes, you can always reduce your CGT and your estate agent or notaire is the best person to sit down with you and work out how best to reduce your gains (Never EVer use an estate agent who recommends you ask the buyer for money under the table as often happens - this could land you in TONS of trouble!!!). There is no capital gains tax to pay on the profits from selling your French Property if you can prove that the property is your principal residence and it is held in your personal name.
If the property is a second home, in addition to a 1000€ nil rate band, there is a 10% tax allowance per year of ownership after the fifth year. Therefore in 15 years’ time the property will be free of Capital Gains Tax.
If you are non French-domiciled but living in a country in the European Union (eg UK residents), the capital gains tax rate in 2007 is 16% on secondary homes in France. If the tax payer is not in the EU then a 33% rate is imposed. For French-domiciled individuals the rate including the social contributions is 26%. This does not apply to developers or trading companies.
The gain is calculated on the difference between the sale price and the original purchase price. In addition to the purchase price certain costs such as home improvements can be deducted (either the real cost or a value of 7.5%). Only home improvements carried out by a registered professional can be taken into account.
After 5 years, the owner can ‘increase’ the original purchase price by 15% to account for improvements and expenses even without justification.
With careful calculations and if you've kept receipts for work that you've done on teh house then you should be able to get away with paying little legally.
I hope this helps
Claire Healy
Attika International
Property in Nice, Property in Cannes and New Build developments all along the Riviera and other carefully-selected areas of France
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