France is going to conform to the new rules of taxation of capital gains on the sale of second homes. Period, after which the home owner will be exempt from this tax will be reduced from 30 to 22 years. The fact that the law will come into force in September 2013, not at the beginning of 2014, gives optimism to all the players on the French real estate market.
Capital gains tax is charged essentially on the net profit from the sale of real estate. For non-residents of France it is 19%, in case the property is his second home. The number of years during which the property was owned is also important for calculation of the tax size.
Previous French President Nicolas Sarkozy increased the term of tax exemption from 15 to 30 years. However, the new head of state, Francois Hollande declared this decision wrong and said that the tax policy of Sarkozy's government worsened the economic situation and led to stagnation in the real estate market in France.
Experts believe that the decision to increase the period to 30 years has led to a reduction in real estate sales across the country. Normally 800,000 transactions with the secondary real estate is performed in France every year, but in 2012 this number decreased by 22% to 665,000. The number of foreign buyers has also decreased over the year by 29% from 15,073 to 10,663.
Realtors believe that the shortening of the exemption period will be good news for all players in the housing market. Sellers will be able to take a more informed decision about selling real estate, and increased competition will lead to increased choice and more reasonable prices.