*French government gives ground on capital gains tax

The French government has agreed to give ground on its plan to abolish capital gains tax (CGT) relief on investment properties and second homes, following opposition from its own MPs, according to local media reports.

Instead of reducing the amount of relief owners can claim as was first feared, CGT relief will be 100% but over double the time period of the current system.

Details of the proposals are as follows:

2% abatement of CGT for each year if the property is sold between 5 and 15 years since first purchased
3% abatement each year during years 15 to 25
10% abatement each year during years 25 to 30

This replaces the former 10% per year applicable after five years of ownership, in years 6 to 15 inclusive, making the property free of CGT after 15 years of ownership. This is now effectively after 30 years of ownership.

The rate of tax (and a special social charge) is 32.5% of the capital gain. The new rules will apply for all notarised transactions after 01 February 2012 (and not earlier as announced).

Source: Global edge

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