French government to cut capital gains tax in 2013

Tuesday, September 25, 2012

French government to cut capital gains tax in 2013

The French government is to cut capital gains tax (CGT) on investment properties and second homes by 20 per cent in 2013, in order to stimulate the country's housing market.

The measures, due to be announced in the government's 2013 budget on Friday, will replace the current system introduced in February which raised the threshold for property gains tax exemption from 15 years of ownership to 30 years. Currently capital gains tax stands at 34.5% for French nationals and those who are not resident in France but live within the EEA.

The government is also expected to announce a revised version of the Loi Scellier buy-to-let tax break. The new scheme will allow buyers of new properties to offset 17-20 per cent of the cost of the property against their income tax bill over 9-12 years, if the property is let to those on modest incomes at rents 20 per cent below market levels. This incentive will only apply to certain regions of France where there is a shortage of inexpensive housing for local people.

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