Real estate capital reform: tax cuts, Government sees red
has been published December 02, 2022
Reading 3 min.
author Elodie Fuentes
The real gem in the pond is the revision of the text regarding the real estate equity of second homes, causing strong shocks. The Senate, by resolution, intends to reduce the tax burden of owners when selling their property. It remains to be seen whether the government is prepared to follow this course or abandon the reform by using 49.3 again.
How is this good news for owners?
It is currently taxed selling second homesowners a Amendment to the Finance Bill 2023 Suggested by Vincent Delahaye last Friday, November 18th. Described as radical, this real estate capital gains tax reform plans to significantly reduce the tax burden on owners when they sell their properties. The centrist wants the alliance with its own drastic intervention to standardize the tax rate by simplifying the tax burden on the owners of real estate investment gains assets acquired less than two years ago 30% and for 15% for others. As forexemption from real estate capital gains tax If he is imprisoned for more than 30 years, he would be sentenced to disappear.
Good to know
Currently, the tax on the sale of a house or second-class apartment depends on two criteria, on the one hand, the amount of capital gain, and on the other hand, the holding period of the property. Owners under the age of 5 are taxed the highest, with a tax rate of 36.2%, including a tax rate of 19% and a social security rate of 17.2%. For a property dated 15 years ago, the tax burden on the transfer of secondary real estate sales is reduced to 22%, then disappears completely after 30 years of ownership.
With this new reform, the senators want to tax real estate investment gains to ease the tax burden on young sales and is not in favor of excluding the transfer of title deed for more than 30 years. The basic system of tax benefits is completely revised in favor of owners.
What is the purpose of this amendment?
Reform by simplifying and reducing capital gains tax for ownersincrease in the volume of transactions related to real estate in the sphere of second homes and landlords, especially for the sale of recently acquired properties. To achieve this, the reform text is based on the existing model of neighboring countries such as Spain, Great Britain or even Sweden. same effective tax rate to all capital gains. Thus, reform is committed eliminate the tax exemption on capital gains after 30 years of ownership of the property. The adoption of this measure by senators can also be defended on the basis of arguments fight against real estate speculation in the area. However, the amendment will only take effect to avoid frustration for owners who want to hold on to their properties for the long term and to give them time to turn around against the upcoming tax inversion.From January 1, 2024.
Why is the government against it?
Despite the shadow of another 49.3 passed by senators during the first reading of the 2023 finance bill, which could sweep everything in its path, the real estate capital gains reform is proving itself as divided as it is. Against the background of a war of numbers, the Government and senators defend their argument against everything. Gabriel talks about Attal “a very significant revenue loss for public financesSenators don’t want to believe it It cuts 4 billion euros It was announced by the Minister of Accounts. Words like “BIG BANG” and “Revolution” are not lacking on the side of its detractors to express their displeasure with this amendment. When the current regime announces the fight against real estate speculation and the stability of the current tax system and its ecosystem, the reformers protest the exact opposite.
It remains to be seen whether the government will approve the text voted in the Senate, or whether it will use its trick again. challenge 49.3 Submission of the Constitution to the Milli Mejlis. MPs are set to hear the outcome of the 2023 finance bill saga in December.
- Tax on real estate capital gains from second homes tends to be standardized.
- The Senate votes on a tax reform to 30% of the tax on goods purchased less than two years ago, and up to 15% on others.
- According to the senators, this measure aims to increase the number of real estate transactions and limit speculation.
- The government opposes this reform of the real estate capital gains tax, arguing that the cost of the transaction is too high.
- Deputies must vote on the text in mid-December for its final adoption.
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