What allowances are available for property sales?
When selling a property (built or not), there are two cases to be distinguished:
Speculative profit is where the investment was made solely with a view to reselling in the short term and making a profit on the sale. By "short-term", the tax authorities consider that if the purchase and sale of an asset takes place within a period of less than 2 years, then the investment is speculative.
The speculative profit will then be calculated as follows:
Sale price - Purchase price = Speculation profit
The speculative profit will be taxed on the progressive scale, i.e. at the "normal" rate.
The profit from the sale of a property is considered to be a capital gain when the period between purchase and sale exceeds 2 years.
In this case, the capital gain is determined as follows:
Sale price - Revalued acquisition price = Profit on sale
This capital gain will be taxed at half the overall rate (half the average rate), i.e. at a maximum of 21%.
Certain allowances can also be deducted from the capital gain, but these cannot be used to create negative income.
Every 10 years, each taxpayer benefits from 50,000 euros, increased to 100,000 euros for spouses and partners taxed collectively. Note that the amount is reduced if you have already taken advantage of this allowance in the last ten years**.
In the case of a succession, an allowance of 75,000 euros is granted where the property acquired by inheritance in a direct line was the parent's principal residence.
Example :
Yannick and his wife are selling their second home. They bought it in 2016 for 500,000 euros. They are now selling it for 800,000 euros. The property has been revalued at €600,000.
Yannick and his wife are taxed at the overall rate of 30%. They have not benefited from any tax relief in the last 10 years.
Holding period
2021 - 2016 = 5 years, so the 2-year period is respected
Capital gains
800,000 - 600,000 = 200,000 euros
Allowance
200,000 - (50,000*2) = 100,000 euros
Tax on the sale
100,000 * 15% = 15,000 euros
1. Speculative profit
Speculative profit is where the investment was made solely with a view to reselling in the short term and making a profit on the sale. By "short-term", the tax authorities consider that if the purchase and sale of an asset takes place within a period of less than 2 years, then the investment is speculative.
The speculative profit will then be calculated as follows:
Sale price - Purchase price = Speculation profit
The speculative profit will be taxed on the progressive scale, i.e. at the "normal" rate.
2. Profit on sale
The profit from the sale of a property is considered to be a capital gain when the period between purchase and sale exceeds 2 years.
In this case, the capital gain is determined as follows:
Sale price - Revalued acquisition price = Profit on sale
This capital gain will be taxed at half the overall rate (half the average rate), i.e. at a maximum of 21%.
Certain allowances can also be deducted from the capital gain, but these cannot be used to create negative income.
Every 10 years, each taxpayer benefits from 50,000 euros, increased to 100,000 euros for spouses and partners taxed collectively. Note that the amount is reduced if you have already taken advantage of this allowance in the last ten years**.
In the case of a succession, an allowance of 75,000 euros is granted where the property acquired by inheritance in a direct line was the parent's principal residence.
Example :
Yannick and his wife are selling their second home. They bought it in 2016 for 500,000 euros. They are now selling it for 800,000 euros. The property has been revalued at €600,000.
Yannick and his wife are taxed at the overall rate of 30%. They have not benefited from any tax relief in the last 10 years.
Holding period
2021 - 2016 = 5 years, so the 2-year period is respected
Capital gains
800,000 - 600,000 = 200,000 euros
Allowance
200,000 - (50,000*2) = 100,000 euros
Tax on the sale
100,000 * 15% = 15,000 euros
Updated on: 12/02/2024
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