Finance bill 2025: what awaits property owners

While the examination of the finance bill for 2025 has started, amendments concerning real estate taxation of individuals were adopted in the Finance Committee, modifying the current rules on the taxation of real estate capital gains and exemption on the main residence.

An amendment to put an end to reductions for length of detention

Currently, owners benefit from a system of capital gains allowances when selling real estate, based on the length of ownership. After 22 years of ownership, they are completely exempt from income tax on the capital gain realized, and after 30 years, they are also exempt from social security contributions. This system promotes long-term holding and constitutes a significant tax advantage for real estate investors.

However, a recent amendment could upset this balance. He proposes to remove the allowances for holding periods and replace them with indexation of the acquisition price according to inflation. Concretely, this means that the purchase price of the property would be revalued taking into account the inflation accumulated since the acquisition, which would mechanically reduce the amount of taxable capital gain. This measure would aim to reflect economic reality more faithfully and to prevent inflation from creating artificial added value.

At the same time, the capital gains tax would be at the “flat tax” rate, currently set at 30%, but which could be increased to 33%. The stated objective is to simplify the tax system and encourage owners to put properties back on the market, in order to boost a currently sluggish real estate sector.

Tax exemption on tax residence conditional on a minimum holding period

Concerning the main residence, another amendment proposes to condition its tax exemption on a minimum duration of occupation of five years. Thus, to benefit from the total exemption on the capital gain realized during the sale, the owner must have lived in the property for at least five consecutive years. Exceptions would, however, be provided for specific situations such as separation, professional transfer or hospitalization, in order not to penalize taxpayers faced with unforeseen life changes.

These potential changes provoke strong reactions. On the one hand, they could encourage owners to sell long-held properties, thereby increasing supply in a market where demand remains strong. On the other hand, they risk slowing down long-term real estate investments, by reducing the tax appeal of prolonged ownership. Professionals in the sector also fear a negative impact on residential mobility, particularly for young households or people who move frequently for professional reasons.

The debate is therefore open between the need to revitalize the real estate market and the risk of penalizing certain owners. Defenders of the reform believe that it will make transactions more fluid and better align taxation with economic reality. Opponents, for their part, fear a more complex system and a reduction in the attractiveness of real estate investment.