Secondary residences: an exceptional tax allowance of 25%

In June 2013, François Hollande decided to implement a new reform in order to streamline the property market in France, as the tax allowance regime that had been applied in 2011 primarily encouraged building owners to retain their property.

As such, the government hopes to restart sales of land and property by introducing a 25% tax allowance on transfers made between 1st September 2013 and 31st August 2014 and by removing the allowances applied to building land.

The Budget Minister, Bernard Cazeneuve, announced that the minimum holding period for a secondary residence, after which a tax exemption applies, will be reduced from 30 to 22 years. This is therefore good news for those who love France and wish to buy their holiday home within the Hexagon.

This exemption is planned to be applied in a linear and graduated manner as it will be a two-tier allowance. The income tax exemption will apply after 22 years, while the exemption on social contributions will take effect after 30 years.

However, this news, which should have delighted players in the French property market, has been received with mixed reactions. Uninformed about the terms applicable under this new reform, they believe that the market needs more transparency and simplicity in order to function properly.