At the end of last year President Hollande announced more details on his new tax plans.
Prior to his election there had been mention of him ending tax breaks for wealthy residents which made many buyers put their plans on hold, awaiting clarification.
The changes he made related to wealth tax and Capital Gains Tax. France’s wealth tax affects everyone who has net assessable wealth in France valued at or above €1.3m including property. Depending on an individuals’ net worth, rates of between 0.55% and 1.5% apply.
CGT has also been enhanced by the introduction of a social charge (taking the effective pay rate from 19% to 34.5%). This is payable on all gains realised on the disposal of all property except principal private residences.
Although there are slightly higher taxes in place, buyer interest and sales volumes have started to pick up since policymakers have clarified the details. This echoes what we saw in London where concerns over the introduction of a ‘mansion tax’ in the second half of 2012 resulted in buyers adopting a ‘wait and see’ attitude.
The rise in buyer interest has been most noticeable in the South of France in areas such as Mougins, Cannes and St Tropez as demand from Scandinavian and British buyers increases. The number of searches for property in Provence, France on Knight Frank’s Global Property Search website increased by 16% in the first five months of 2013 compared to the corresponding period a year earlier, for example. Indeed, searches for property in Provence from Norway increased by 32.5%.
Most recently Francois Hollande has announced that the taper relief system is to be changed so that from 2014 the required time of ownership before a property is completely exempt from capital gains tax will be 22 years, down from 30 years previously. Furthermore, his previously introduced taper rates will now be a more favourable flat 6% per annum, after six years. This is in addition to a 25% special discount on CGT between 1 September 2013 and 31 August 2014 (not yet law).
Thanks to Mountain Base for the information.