On August 24, the French Prime Minister François Fillon announced a series of French tax increases as part of the French austerity plan to reduce government debt. Certain changes have now been confirmed whereas others are still to be debated.

The key confirmed changes are:

1) Modification of the current Capital Gains Tax exemption on the sale of a second home. The full gain will now only be exempt after 30 years.

For properties owned less than 30 years, a partial CGT reduction is available:

- 2% for each of years 6-18,

- 4% for each of years 19-24

- 8% for each of years 25-30

This change is applicable from 1 February 2012 – so if you were thinking of selling a second home in the near future, it may be advisable to move quickly and agree a sale before the end of October 2011 (giving you 3 months to complete the sale).

For French residents owning second homes – the taxation is 32.50% .  For EU residents, the percentage starts at 19% on a sliding decreasing scale and for non EU residents the tax starts at 33.3%.  So basically still buyers from the EU although still taxed are not taxed as heavily as non-eu and French residents.

If you have any further questions or are looking to see a house in France, please contact Winkworth’s French department on 020 7870 7181