8 hours 22 minutes ▪ 5 minutes read ▪ Written by Luc Jose A.
The French real estate market is about to undergo major changes. With the draft Finance Act 2025 currently under consideration, property owners find themselves at the center of significant tax reforms that could reshape the way property is taxed. Traditional tax deductions for capital gains, principal residence deductions, and other tax benefits that have favored investors over the past few decades are under scrutiny. These changes, which have occurred amid tense economic conditions and a depressed real estate market, have raised questions about how property owners will adapt to these new measures.
Real estate capital gains tax reform
The first highlight of the bill concerns the repeal of the ownership period exemption. Currently, property owners receive a significant tax deduction on capital gains after 22 years of ownership, and full tax exemption on social contributions after 30 years.
However, according to the draft provisions, this measure could be replaced by the indexation of real estate purchase prices based on inflation. The reforms are aimed at “more accurately reflecting economic reality” and preventing the creation of artificial capital gains due to inflation, according to the lawmakers responsible for the issue.
In fact, this amendment could significantly change a property owner’s long-term investment strategy. Replacing the current exemption with price indexation could reduce the tax appeals associated with long-term real estate holdings. The draft proposal also proposes applying a flat tax rate of 30% on capital gains, which could rise to 33%. Reform proponents say the amendments are intended to “stimulate the market” and encourage property owners to put their properties back on the market faster.
Change in principal residence deduction
Another important aspect of the reform concerns the exemption from capital gains tax on the sale of a principal residence. The proposed amendments therefore provide that this exemption is subject to a minimum period of five years of actual residence in the property. The changes are intended to limit tax abuse and promote residential stability. However, to avoid disadvantage due to unforeseen circumstances, exceptions are made in certain cases such as transfer, separation from employment, hospitalization, etc.
This measure may have an impact on residential mobility of households, especially young workers who are often forced to relocate for work reasons. Experts in the field fear that the reduction in the flexibility of exemptions for principal residences will put a brake on developments in the real estate market, which is already affected by rising interest rates.
While some believe the reforms will encourage transactions and curb speculation, others fear it will make real estate investment less attractive. In the longer term, these new rules may also cause some property owners to reconsider their investment strategies, although their long-term impact is still difficult to assess.
The proposed reforms under the Draft Finance Act 2025, in particular the abolition of the ownership period exemption and the tightening of the main residence exemption conditions, clearly aim to simplify the tax system and revitalize the stagnant real estate market. The purpose is However, these changes could significantly alter the strategies of investors and property owners by reducing the tax benefits traditionally associated with long-term ownership. While some industry players see these measures as an opportunity to restore a completely diminished real estate supply, others see them as an opportunity to restore residential mobility and long-term investment attractiveness. considered a threat. The debate surrounding this draft law has only just begun, and the impact on the French real estate market will become clearer as these reforms come into force.
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Luc Jose A.
Toulouse Scientific Diploma and Certification Consultant Alila Blockchain Exam Rejoined 2019 Coin Tribune. Examining the potential of blockchain in the field of economics, and the relationship between public sensibilities and information providers that will bring about a certain evolution of the social system for learning economics. The month is about understanding blockchain and its opportunities. Analyze the purpose of reality, decipher trends in Marche, analyze innovative technologies and perspectives, and analyze social revolution in Marche.
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The views, ideas and opinions expressed in this article are solely those of the author and should not be construed as investment advice. Please do your own research before making any investment decisions.
