French property – capital gain reduction to end as market starts to strengthen

When selling a property in France there is currently a measure in place that whereby owners to benefit from a reduction of 25% on the amount of their capital gain, thus greatly reducing their exposure to capital gains tax.

The government put this in place to soften the property market and generate some liquidity in the French property market, but the exemption is only in place for property sales made before 31 August 2014.

As this deadline approaches, some real estate professionals across the channel are getting agitated. “There is a month to go, we have already pleaded with Matignon about a six month postponement which would boost some activity,” explains Jean-François Buet, President at Fnaim.

“The rumour of a report on the occasion of amending this bill is circulating. That would be good news, as the market for second homes is still devastated,” says Thierry Thomas, president of the Institute of Notarial Real Estate and Notary Rezé (Loire-Atlantique).

Of course when asked about this, the Office of the Secretary of State for the Budget says that the extension of the reduction “is not a subject”. Same story with the Ministry of Housing.

Unless there is last minute turnaround, those who have not signed the deed of sale by August 31 will therefore not be eligible for this allowance. This might slow the market a little bit, but it has to happen sooner rather than later and with French mortgages still with low rates and long term growth plans for the Eurozone economy, maybe letting this rule slide isn’t such a big deal.