There continues to be speculation about a toughening of taxes on capital gains tax on property sales.

As we have reported previously in the Newsletter, there has been a lively debate in France in the past year or so about the current tax exemptions granted on the sale of property.

Not only is the principal home entirely exempt from capital gains tax and social taxes (prélèvements sociaux), but there is also a complete exemption for any capital gains on property owned for at least 15 years.

Between 6 and 15 years of ownership there is tapered relief of capital gains tax and social taxes.

Many senior figures in the French parliament have been calling for an increase in taxes, notably Gilles Carrez, the Chairman of the Finance Committee in the National Assembly.

Last January that of Christine Lagarde, then Minister of the Economy, added her own voice to the debate, by arguing for a review of the exemptions as part of the more general review of the taxation of personal wealth.

Such was the outcry over this proposal that in February President Nicolas Sarkozy was quick to quash the idea, no doubt sensing potential dire electoral consequences.

Nevertheless, in the background the issue continues to be debated, and attempts have been made to nibble away at the current concessions.

Christine Lagarde again recently questioned the abatement relief granted to building land held between 6 and 10 years, arguing that it acts as a constraint on development and pushes up land prices.

In June, her idea was carried into the parliamentary chamber by Olivier Carré, a deputy who tabled an amendment to the finance bill proposing abolition of the relief. The proposal was not carried forward into law, but there was widespread political sympathy for the change.

Gilles Carrez has also been foremost amongst those proposing an end to the exemption of social charges for all capital gains on property, irrespective of the length of ownership and type of property.

The rate of these taxes is 12.3%, but they are only charged if the property has not been held for 15 years. The main home is also always exempt.

There has already been an increase in taxes on land that has become zoned for development.

Given the pressure on public finances it seems inevitable that in due course there will be an increase in taxes on capital gains, but it may well not happen until after the presidential elections in next April and May.