French property tax law has changed and may boost French property sales that include real estate that is need of renovation.
Non-professional private individuals who are not registered for TVA will no longer be subject to TVA @ 19.6% (French equivalent of VAT in UK taxed @ 17.5%) when they sell a property which they have extensively renovated themselves (i.e. more than 70% of the construction is new), or transformed a barn into a home changing its designation therefore creating a new home, or built their own home from scratch.
Previously, this tax has been applicable for five years from the date when the declaration of completion of the works was submitted. This was proving too difficult to manage for the Government tax authorities, notaries and agents alike.
So, if you come to France you can renovate or build a new house, when you come to sell it and providing that it is your principle fiscal residence, you will not only benefit from zero capital gains tax – you will now also be VAT exempt in France.
This is great news for amateur developers and experienced DIY enthusiasts. However, beware that you will need to insure that the building work you carry out is covered by a ‘domage ouverage’ policy and that if you own a building company you may be considered a professional.
The previous exemption on ‘droits de enregistrements’ (land registry and stamp duty equivalent) returns to the normal level of around 5.06%
Source: http://www.frenchestateagents.com
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