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France Seeks New Taxes On Second Homes

by Ulrika Lomas,, Brussels

12 December 2012

The Socialist French government has recently submitted an amendment to the country’s year-end supplementary finance bill providing for two new real estate taxes to be introduced targeting wealthy individuals in France.

The government aims to impose from next year an annual dwelling tax (taxe d’habitation) surcharge or "super tax" on the owners of under-occupied property located in designated "tense zones," areas of acute housing shortage, including large cities such as Paris, Toulouse, and Lyon.

Intended to target the secondary residences of France’s wealthiest, the super tax would be imposed at a rate of 5% of the rental value of the property in addition to the normal local taxes.

The same amendment provides for the introduction of surtaxes levied on large capital gains derived from the sale of real estate, excluding a main residence. Under the plans, a surtax of 3% would be imposed on the share of capital gains realized between EUR100,000 (USD130,000) and EUR150,000, on top of the usual 19% tax and in addition to the 15.5% rate of social levies. The fraction of capital gains realized following the sale of a second residence in excess of EUR150,000 will be subject to a 5% surcharge.

The proposed taxes are expected to yield in the region of EUR300m for the state.

Denouncing the government’s latest plans to tax the rich in a bid for social justice, National Assembly Finance Committee President and Union for a Popular Movement party member Gilles Carrez insisted that the measures are merely a new attack on the wealth of French citizens, and a further blow to the property market and to the tourism economy.

France’s 2012 supplementary finance bill is currently being debated by the French National Assembly.

TAGS: individuals | capital gains tax (CGT) | tax | investment | real-estate investment | property tax | real-estate | tax rates | France

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