Couples facing divorce also sometimes face the uncertainty of whether they will be liable for capital gains tax on the sale of the former marital home.

Over the years the French government has attempted to ease the regulations, but the particular circumstances of each case does occasionally mean that the courts need to adjudicate on the issue.

Of course, if the property is your main home and you live there, then no capital gains is payable (at least for the moment!). But what happens when, following separation, one or both parties does not occupy the property?

The broad administrative doctrine adopted by the French tax authority is that a divorcing couple would not be liable for capital gains tax, provided the sale of the property took place within a ‘reasonable period’ of the formal divorce or separation.

This rule applies to both parties, even though one of them may not be occupying the property as their main home.

If both have vacated the property, then it becomes more difficult, and the circumstances would need to be considered on their merits.

Given the complications and delays that arise in divorce settlements, it is also sometimes difficult to determine the precise date from when consideration of the ‘reasonable period’ should begin.

In a recent case before a tribunal in Montpellier, the court decided that the former marital home does not lose its status as the principal residence (and thereby exemption from capital gains tax) even though it had not be occupied by the owner for over five years.

In this case, the husband had been ordered by the court to vacate the property in 2001.

He relocated to a rental property in the same commune where he could have continued convenient access to his children, who remained with his former wife in the former marital home.

She was eventually able to raise a loan to buy the property (ownership of which that was not transferred to her as part of the divorce), but this did not occur until 2006, some five years later.

Despite the passage of time the court took the view that the house did not lose the quality of ‘résidence principale’ as it continued to be the centre of his family interests. As a result no capital gains was payable.