Capital gains on real estate
Here again the principle is similar to that outlined for institutional and corporate investors (International > Institutional investors / Companies > Capital gains on real estate).
however, if the asset is held directly or via a SCI the calculation of the capital gain is different.
The value of disposals of real estate by individuals who are non-residents is determined as for French individuals (see Individuals / Capital gains on real estate).
On the other hand, tax is paid under the same conditions as for institutional investors. It may also be necessary to appoint a tax representative.
focus // CAPITAL GAINS ON DISPOSALS OF MAIN RESIDENCES: TAXATION OF EXPATRIATES
French tax residents are exempt from tax on capital gains realised on their main residence: the tax administration also allows this exemption to apply even if the taxpayer has moved and the property is no longer his or her main residence at the time of disposal (disposal must occur within a reasonable time once the property has been placed on the market, in principle one year).
This tolerance will not apply if the vendor has left France and is therefore no longer tax-resident in France at the time of disposal of the former main residence.
In this case, the tax administration applies the regime applicable to non-residents of France for tax purposes who are disposing of accommodation located in France (article 150 U II. 2° of the FTC). Since 2014 this regime has not allowed total exemption, but rather exemption of capital gains up to €150,000 (after deduction has been made for the period during which the asset was held). This limitation is the counterpart to the extension of the (partial) exemption where a residence was rented before being sold.
Thus, unlike taxpayers who move somewhere else in France, an expatriate will face a tax charge on his or her former residence in France.
The disadvantageous position of expatriates may improve in future as there are ongoing disputes in this matter in tandem with the more general question of social security charges on non-residents.
The regime governing capital gains on real estate applies to:
- disposals of buildings by a natural person
- disposals of shares in a SCI by a natural person
- disposals of buildings by a SCI owned by a natural person.
The regime governing capital gains on shares applies to:
- disposals of companies subject to CT (whether dealing mainly in real estate or otherwise) by a natural person (not discussed here).
The company CT regime applies to:
- disposals of buildings by a company subject to CT (Acquisition / disposal > Real estate asset > Capital gain on disposal).
Note that for natural persons, the one-third charge under article 244 bis A of the FTC
From 2012, social security charges at 17.2% have been added to the tax on capital gains.
The application of such charges is currently being challenged by residents of the European Union on the basis of Community legislation on social security contributions.