Capital gains tax deductions for French property?

My wife and I bought a holiday property in France in 2001. We are resident in the UK.

26 June 2019
By Hugh MacDonald

We have renovated the house and converted barns for use by friends and family. Work such as roof replacement, septic tank installation, plumbing, electrics and installation of a swimming pool were all done by companies. Internal conversion (partitions, doors, staircases, tiling, decoration, sanitary installation, kitchen...) was done by us and friends and family. I have all the receipts for materials.  We want to sell. What costs are allowed against French capital gains tax?  B.H.

Unfortunately, the only costs that are allowed for capital gains tax purposes are those for which there are invoices made out to the property owners and at the property’s address.

Your personal input into the project cannot be claimed against capital gains tax since you cannot invoice yourself.

However, there is a set rebate that is available at the taxpayer’s choice instead of actual costs, of 15% of the property’s initial purchase cost.

There is also an abatement that is given against the final capital gain for both income tax and the accompanying social charges.

The income tax abatement is spread over 22 years.

As you will have owned the property for at least 18 complete years by the time you sell, all but four years of the gain will be wiped out by the time allowance, leaving only some 20% of the capital gain being liable to tax. 

For the social charges, the allowance runs to 30 years. The first 21 years benefit from an allowance of 1.65% per year, the 22nd year has an allowance of 1.60% and thereafter the allowance is 9% through to year 30.

Reader's query answered by Hugh MacDonald

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