T
he French real estate market is on the cusp of a significant transformation due to the draft finance law for 2025. This legislation aims to overhaul the tax system, potentially altering the way property owners are taxed and their long-term investment strategies. The current exemptions for capital gains, primary residences, and other tax advantages that have favored investors in recent decades are under scrutiny.

    The proposed reforms include ending exemptions based on duration of ownership, replacing them with an indexation of the purchase price to inflation. This change aims to reflect economic reality more accurately and prevent artificial capital gains due to inflation. Additionally, a flat tax rate on capital gains could rise from 30% to 33%, intended to stimulate the market and encourage property owners to sell their properties more quickly.

    Another key aspect of the reform is the exemption from capital gains tax on primary residence sales, which will now be conditional on a minimum five-year actual residence in the property. This change aims to limit tax abuse and promote residential stability. However, exceptions are provided for unforeseen situations such as job relocations or hospitalization.

    These reforms could have far-reaching consequences, particularly for younger workers who often need to relocate for job reasons. The reduction of flexibility in primary residence exemptions may slow down the already sluggish real estate market due to rising interest rates. While some see these changes as an opportunity to combat speculation and facilitate transactions, others fear a decrease in the attractiveness of real estate investments.

    The proposed reforms aim to simplify the tax system and revitalize the stagnant real estate market. However, they are likely to deeply alter the strategies of investors and property owners by reducing traditional tax advantages associated with long-term ownership. As these changes come into effect, their consequences for the French real estate market will gradually unfold, sparking ongoing debates among industry players.