Photo
Résidence principale

Principal residence: the capital gain on the sale is tax exempt

Chapô

The capital gain realized on the sale of a principal residence is exempt from tax. The tax administration recently clarified the conditions to be met to benefit from this exemption in the event of a sale after a disaster.

Introduction

The exemption in the general case

 

When you sell real estate for more than you bought it, the capital gain you realize is normally subject to tax (at the flat rate of 19%) and social security contributions (at the flat rate of 17.2% ). Its taxable amount is, however, reduced by a variable allowance depending on the length of time you have kept the property, which allows you to be exempt from tax after 22 years of detention and social security contributions after 30 years.

As an exception, in the event of the sale of your main residence, that is to say the accommodation that you occupy with your family for most of the year, your capital gain escapes tax, regardless of the duration. during which you lived there. The exemption applies even if you have moved before selling, as long as the property was your main residence until it was put up for sale and the transfer takes place within a normal period.

For example, the Council of State ruled that the exemption was applicable to a sale made two and a half years after the owner's departure, this period being linked to the revision of local planning rules which had the effect of slowing down the 'surgery.

To note. If you sell your second home, your capital gain may be tax exempt, subject to conditions, if you meet the sale price in the purchase of your primary home. Your capital gain is also exempt if you sell a property for less than 15,000 euros. The same is true of capital gains realized by retirees and invalids with very modest incomes.

 

Description

Exemption in the event of the sale of damaged property

In a document published in December 2020 in the Official Bulletin of Public Finances, the administration provided details on the assessment of the normal period of sale when the transferred main residence is unoccupied due to a fire. She indicated that, in this case, the exemption can apply even if the property has been unoccupied for several years before being sold.

However, certain conditions are required for the exemption to apply. On the one hand, the property must be the seller's main residence on the day of the disaster which made it uninhabitable. On the other hand, the seller must do what is necessary for his property to be rebuilt as soon as possible and for its sale to take place as soon as the reconstruction work is completed. Finally, the deed of sale must be signed shortly after the reconstruction and the property must have remained unoccupied between the date of the loss and its sale. When these conditions are met, the seller can benefit from the exemption even if the sale of his main residence has taken place several years after the loss.

An exceptional allowance until 2023

If you sell real estate to a person committing to destroy it in order to build a collective residential building instead, you can benefit from an exceptional reduction of 70% on your taxable capital gain, in addition to the allowance attached to the length of detention. However, it will only be granted to you if you meet the following three conditions: the property sold is located in a priority development zone, the promise of sale is signed by December 31, 2023, the final deed of sale is signed in the following two years. The rate of this exceptional allowance will be increased to 85% if the purchaser agrees that social and intermediate housing will represent at least 50% of new constructions.

 

Our Vaneau Patrimoine advisers are at your disposal, request an audit or a Visio appointment now!

Vaneau patrimoine

Tél : +33.1.45.03.80.95

info@inpa.fr

Read more