Tax relief for second home owners in France
In a move that could benefit hundreds of expats living in the country, French President, François Hollande has announced a change to the nation’s capital gains tax system on second home sales hoping that such a move will boost fluidity in the struggling French property market.
The tax system will be changed in 2014 and will see the required time of ownership of a property before it becomes tax exempt lessen. The proposals will see the length of time be reduced to 22 years, down from the 30-year system which was ratified in September 2012.
Nicholas Leach, Partner at Athena Advisors said, “This could be considered as a bit of a U-turn by the government, reverting to a system which is similar to that of when Sarkozy was in power.
“The changes in taxation were part of the reason why French home sales dropped at the start of 2013 and whilst the availability of attractive mortgages is stimulating property markets in touristic areas, Hollande clearly wants to re-invigorate domestic home sales too.
“Last year’s property tax changes put off many foreign buyers off buying French property and now with Hollande’s changes we may see some buyers return to the market. Foreign investors looking to buy French property are currently experiencing some very interesting market conditions.
“Mortgage rates are the lowest in history, prices have softened a little and now Hollande is making reforms to reinvigorate the market. If his plans work, investors may rue the day they didn’t exploit these factors, after all France’s core property markets of Paris, the Alps and the Cote d’Azur have mostly performed very well over the last five years in spite of the economic downturn.”
The French President explained the move saying that the changes are being implemented to ensure that the market is supplied and that it will be a draw for prospective property buyers.