A Frequently Forgotten Capital Gains Tax Exemption

Tuesday 02 August 2011

Those who are of retirement age on a low income are exempt from French capital gains tax.

The same exemption applies to those of any age who are permanently incapacitated and unable to work.

In the maelstrom of the recent debate on capital gains tax in France, these are tax exemptions that are frequently forgotten.

In order to be eligible, the maximum net income threshold that applies for a retired person is currently a revenu fiscal de référence of €9,876, so the income threshold is not generous.

The threshold is increased by €5,274 for each additional adult person in the household.

The reference period for determining your income two years prior to the sale! So if you are seeking to make use of the exemption this year, then it is your income tax return for 2009 that will be used to assess your eligibility.

The exemption is also conditional on you not being liable to wealth tax (l’impôt de solidarité sur la fortune) in the year preceding disposal of the asset.

You must also be resident in France.

In relation to a property that is in joint ownership, but not in the same fiscal household, then the exemption will apply in relation to the circumstances of each owner.

Needless to say, if the property is your main home, then you have no need to concern yourself with this exemption, as no capital gains tax applies in relation to the principal residence.