Capital gains on a second home in Corsica

How capital gains are calculated

The gross capital gain is the sale price less the adjusted acquisition price. This adjusted price includes acquisition costs — either actual costs or a flat rate of 7.5 % — and works, based either on actual contractors' invoices or a flat rate of 15 % of the purchase price where the property has been owned for more than five years.

The net capital gain is then calculated after applying allowances for the length of ownership, which differ for income tax and social charges.

• —Income tax: 6% allowance per year from the 6th to the 21st year, 4% in the 22nd year.
• —Social levies: 1,65 % per year from the 6th to the 21st year, 1,60 % in the 22nd, then 9 % up to the 30th.
• —An additional tax of 2 to 6 % applies above 50 000 € in taxable capital gains.

Exemptions

A main residence is fully exempt, which requires actual occupation on the date of sale. For a second home, several other tax arrangements may apply.

• —First sale of a home other than the main residence, subject to reinvesting the proceeds in the purchase of a main residence within 24 months and not having owned your main residence during the previous four years.
• —Sale price less than or equal to 15 000 €.
• —Owned for more than 30 years.
• —Sale by a pensioner or disability card holder, subject to means testing.
• —Compulsory purchase, with reinvestment of the compensation.

Corsican considerations to plan for

Many island properties derive from earlier inheritances or family joint ownership. The acquisition price used is then the value stated in the inheritance tax return, which can automatically increase the taxable capital gain if that value was underestimated at the time.

Works on village houses were often carried out long ago and paid for without a contractor's invoice: in this case, only the flat-rate allowance of 15 % can be used. Keeping tradespeople's invoices is the best way to optimise the calculation.

Non-residents are subject to the same tax scale but must appoint an accredited tax representative when the sale price exceeds 150 000 € and the property has been owned for less than 30 years, unless they live in the European Economic Area.