Capital gains tax on the sale of building land has been aligned with that of other property, and there is a tax reduction until the end of 2015.

In France there is talk of a housing crisis, mainly it seems because 'only' around 300,000 new homes were built in the past year, well short of the target of 500,000 a year President Hollande set for himself at the start of his presidency.

In the UK, where each year around 125,000 homes are built, such a figure would be considered grounds for a round of back-slapping.

Nevertheless, in France, where the sensibilities about access to housing are far higher, and the influence of the construction lobby greater, the government have been forced to act.

As part of a wider 'Plan de relance du logement', they have wound back the clock on the taxation of building land.

The previous rules have been an anomaly ever since plans to tax gains on such sales as part of the income tax system fell foul of the Constitutional Council in 2012.

As a result, the tax on the sale of building land has continued at the rate of 34.5%, comprising 19% capital gains and 15.5% social charges, with an allowance for duration of ownership granted over 30 years.

Since 1st September, the period over which the allowance for duration of ownership has been reduced, in line with that for residential property. The rate of tax remains the same but a temporary discount has been granted on the capital gain.

Accordingly, the rules that apply from 1st September are as follows:

i. Capital Gains Tax

For capital gains tax tapered relief will apply over 22 years, as follows:

• No allowance for the first 5 years of ownership.
• Between 6 and 21 years of ownership: 6% allowance per year.
• For the final 22nd year of ownership: 4% allowance.

ii. Social Charges

In relation the social charges the allowance will remain tapered over 30 years:

• No allowance for the first 5 years of ownership.
• Between 6 and 21 years of ownership: 1.65% per year.
• For the 22nd year of ownership: 1.60% in this single year.
• Between the 23rd year to 30th year of ownership: 9% per year.

iii. Discount

In addition, all sale contracts that are signed between 1st September 2014 and 31st December 2015 will benefit from an allowance of 30% on the capital gain against both capital gains tax and social charges.

The 30% allowance will apply on the net taxable capital gain, after deduction of the allowance for duration of ownership and other allowances that may apply.

The discount is also conditional on completion taking place by 31st December 2017.