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Capital gains tax in France explained: Renovation materials

We answer a reader question of what can be set against capital gains tax with a property self-renovated over the years

Reader question: We are selling our French cottage that we bought in 1999 and have renovated and enjoyed over the years. We do not have our early receipts for a new roof, septic tank and other work. We have receipts for materials purchased from a local builder’s merchant which enabled me to re-build our garage but I have been told that these cannot be set against capital gains tax because I did most of the work myself. Is this correct? Can we also offset money we paid neighbours for clearing our house and storing some furniture? What about the diagnostic tests for the sale? 

There are two possibilities when it comes to extensions and improvements to a home. You can claim expenses that you can prove were made, using invoices addressed to you at the property’s address.

Alternatively, as you have owned the property for more than five years, you can claim a fixed rate to cover the expenses at the rate of 15% of the cost of the property.

In terms of purchasing materials oneself, this is treated differently if you are building your own home or are making improvements to it later - and if you wish the value to be added to the initial construction cost to reduce the taxable capital gain.

In the former case, you cannot charge for your own time spent working on the property, but you can include the cost of materials you bought. For improvements and extensions, these have to be done and invoiced by a firm which buys the materials it uses. Note also that mere “renovation” or “repair” is not enough, but work has to improve the property or add new comfort and facilities.

House cleaning and storage are not related to the property itself but to you, individually, so these expenses cannot be claimed against any capital gain, but the cost of the diagnostics can, since these are obligatory.

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