Save capital gains tax by moving to French second home before sale

In France you do not pay capital gains tax on the sale of your main home.

People with more than one French property  – or non-residents with a second home here – might wonder if they can pick which is their main residence to avoid paying capital gains tax .

Read more: Do non-residents pay more French tax on second homes than residents?

Read more: When are property sales in France free from capital gains tax?

Spend six months to a year before selling

The answer is that your ‘main’ home is a matter of fact according to French law, but you can change this as long as the change is genuine and can be backed up if you are asked by the tax authorities for proof.

Your main home should be the place where you spend the most time during the year and, although there is no set minimum length of time for establishing the change of status to main home, notaires say it is advisable to live there for at least six months, or even a year, before selling it, so as to gather documentary proof (utility bills, tax statements etc).

Read more: What are the tax implications of selling a second home in France?

Prove it is your main residence

In the meantime, inform the local tax authorities in the area where the property is situated about the change of status from a second, to main, home (this will, for example, also affect whether or not taxe d'habitation is payable). 

You should also give the new address in your annual tax declaration.

If in doubt, tax offices might check where you work and your children go to school, or if you are paying regular utility bills there. 

Normally, if you are in a couple and/or have dependent children, the ‘main home’ is where everyone lives.

Move worth considering to save tax

In some cases, such as some flats in large cities which might have doubled or tripled in value this century, it could be worth considering this if you are otherwise facing a large capital gains tax bill.

However, even where the gain will be more modest, it could be another good reason for those who are not French residents to take the plunge if they have been wondering about whether to move to France or not (in retirement, for example).

Note, of course, that post-Brexit, if you are British or another 'third-country national' to the EU, then to do so you will also have to obtain a long-stay visa giving you the right to stay, and in this case it would not be appropriate for it to be only the six-month 'temporary long-stay' version.

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