MPs back capital gains tax increase

The députés voted for a tougher property CGT regime – but dropped a proposed new holiday homes tax

10 December 2012

AN EXTRA 2% is to be added to property capital gains tax from €50,000, however a proposed new tax on holiday homes has been dropped.

As part of the third “corrective finance law” for 2012, which has had a final vote from the MPs, capital gains on property – which only affects second homes – will have an extra 2% tax levied on them from €50,000, then 3% from €100,000, then another 1% per €50,000 up to €250,000 (reaching 6% maximum).

The original proposal was for 3% from €100,000 and then 5% from €150,000.

These levies would be on top of the ordinary capital gains tax at 19% on the gain (that is, the difference between the sale price and the purchase one).

They are meant to compensate for the removal of a tax on bodies that manage social housing, which was brought in by the last government.

On the other hand, the MPs have decided they will not pursue a plan that could have seen a new tax equivalent to 20% of the taxe d’habitation charged on “under-used homes” (ie. second homes) in “high-pressure areas” including the Swiss border, Paris, Lyon and the Côte d’Azur.

Socialist MP Christian Eckert, the law’s rapporteur, said the MPs had decided “it is not a good idea to add a state tax on top of a local one”.

The law will now be discussed by the senators before it is passed definitively.

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