EXPATRIATION TO PORTUGAL, THE SALE OF YOUR MAIN RESIDENCE IN FRANCE IS EXEMPT FROM CAPITAL GAINS TAX
When you leave for Portugal, it's highly likely that you haven't yet put your main residence up for sale, or that it hasn't yet been sold. The first question to ask is whether the sale of your home will be subject to capital gains tax.
The answer is no, under certain conditions.
Exemption from capital gains tax
In most cases, when you move to Portugal Before you sell your primary residence in France, a administrative tolerance allows you to take advantage of the tax exemption associated with the sale of your primary residence, even if you no longer actually live in the home as of the date of sale.
To be eligible, you simply need to have lived in your primary residence until it was put up for sale, and the sale must take place within a “normal” timeframe. The French tax authorities consider a period of one year to be “normal.”.
However, a longer timeframe isn't necessarily a deal-breaker if you can prove that you've done everything possible to sell your home—such as placing ads, working with multiple real estate agencies, and lowering the asking price…
Until now, this exemption was only valid if you moved within France. If you moved abroad, you could only take advantage of it if you had sold your primary residence before leaving. If you hadn’t had the time or opportunity to sell it beforehand, you were no longer eligible for this exemption. However, under certain conditions, a partial exemption—limited to the portion of the capital gain equal to or less than 150,000 euros—could apply.
Restriction on freedom of movement
While this difference in treatment between residents and non-residents had been deemed constitutional, the Versailles Administrative Court, for its part, ruled in a judgment handed down in June 2018 that it constituted a restriction on the free movement of capital, which is prohibited by the Treaty on the Functioning of the European Union.
The 2019 budget law has just eliminated this distinction. It stipulates that expatriates may now benefit from the tax exemption associated with the sale of the primary residence if they move to a European Union country or a country that has signed a tax treaty with France, provided that the sale takes place no later than December 31 of the year following their departure. In practice, this means that a person who moves abroad at the beginning of the year has up to two years to sell their former primary residence tax-free.
Please note, however, that—as is the case for French tax residents—the property must not be lent to a third party (such as a family member or friend) or rented out between the date of departure and the date of sale.
Subject to this provision, to the extent that this provision applies to transfers made on or after January 1er January 2019, those who have moved abroad since the 1ster Those who sold their home in January 2018 may be eligible for this exemption if they sell their former primary residence before December 31, 2019.
