On 29 August 2014, the Prime Minister, Manuel Valls, announced new measures impacting capital gains tax for the umpteenth time. This announcement concerns sales of building land, which now benefit from the same allowance as that for built-up property.
Since 1 September 2014, the sale of building land has been exempt from capital gains tax after 22 years, compared with 30 years previously.
However, it should be remembered that since 1 September 2013 there have been two allowance scales:
One for income tax, the rate of which is 19% and for which the allowance is 100% after 22 years of ownership.
The other is for social security contributions, CSG and CRDS, at a rate of 15.5%, with a 100% allowance after 30 years.
In addition, sales of building land benefit from an exceptional allowance of 30%, provided that the agreement or promise of sale was signed and registered before 31 December 2015.
In the absence of further details, the 30% allowance should apply to the net capital gain after the allowance for the length of the holding period and before taxation.
This announcement is therefore pleasing, and will go some way to easing the property market, even if it once again shows the government's amateurism in terms of both form and content.
On the one hand, the new government's position marks a confusing turning point. In fact, the 2013 and 2014 Finance Acts tried, unsuccessfully, to impose measures to overtax the sale of building land, in particular by abolishing allowances for length of ownership on the pretext that this would encourage owners to sell!
On the other hand, in terms of form, the tax authorities are basing a new tax rule on a simple declaration! This method is extremely disconcerting for taxpayers and property professionals, who are calling for greater tax visibility.
All the more so as it is highly likely that capital gains tax will be further amended in the 2015 Finance Act... to be continued.
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