Selling a French home after leaving France

A change to French tax rules means that certain capital gains tax and social charges exemptions are now only available to French residents. As a result, expatriates leaving France no longer have a 12-month grace period in which to sell their French property before losing access to valuable main home reliefs. 

Following a ruling from the French Constitutional Court last autumn, certain capital gains tax and social charges exemptions are now only available to French residents. This means that expatriates leaving France before selling their French property will lose valuable main home reliefs. While there is still a 12-month ‘grace period’, since October 2017 this does not apply if the person has already left France.

Generally, selling a property in France attracts capital gains tax at 19% plus a surtax ranging from 2% for gains over €50,000 up to 6% for gains over €250,000. There are also social charges of 17.2%. There is a taper relief system in place that lowers both these taxes in line with the number of years that the property has been owned.

The main home is exempt from both capital gains tax and social charges if it is the habitual and actual residence at the time of sale. But if a person leaves the property without having sold it, they could lose the main home relief entirely when they do sell, even if they have lived in it for many years beforehand. Unlike the UK, there is no ‘time-apportionment’ for periods of occupation.

However, there can be a 12-month breathing space if things are done properly. The main home exemptions can apply for up to one year from the date the property is vacated and put on the market. In order to be eligible, the property:

• needs to be the actual and habitual main residence when it is put up for sale
• cannot be rented out until it is sold
• must be actively marketed.

Previously, it was understood that the 12-month grace period applied even if the owner left France to establish residence in another country. But following a case at the Versailles administrative court, the Conseil Constitutionnel ruled in October 2017 that the grace period is only applicable to French tax residents and does not apply to persons who have left France and become non-residents.

It is possible that this decision will be challenged in the European courts since it could be seen as restricting the movement of people.

In the meantime, if a client is planning to leave France, it is sensible for them to put their property on the market sooner rather than later so they have a chance of selling it before leaving the country.

If they have no choice but to leave before finding a buyer, they should be made aware of the potential savings available from the taper reliefs, as well as the expected capital gains tax and social charge liabilities.

Blevins Franks provides a comprehensive advisory service for those leaving France, to help make the most of all tax opportunities and structure finances effectively.

The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.