Capital gains on real estate: Is compensation paid for a failed purchase offer tax-deductible?

A taxpayer had entered into an agreement to purchase a building lot located in Saint-Barthélemy. However, he subsequently sold the lot to someone other than the original counterparty for a price higher than that specified in the initial agreement. He then paid the original counterparty 700,000 euros to have them waive their rights under that agreement.

When reporting the capital gain realized by the taxpayer, the taxpayer deducted this amount of 700,000 euros from the sale price of the property.

Following a tax audit,administration this deduction. The dispute was ultimately brought before the Administrative Court of Appeals.

The court will therefore rule that this amount did not constitute fees paid to an intermediary or agent. It finds that the amount was intended solely to compensate the other party for the termination of its purchase option.

The Court held that the amount could not be considered compensation for eviction paid to the other party either, since that party was not a tenant of the property.

The Court thus upholds the assessment and the tax owed by the taxpayer on the capital gain from the sale of real estate.

CAA Bordeaux, Jan. 15, 2026, No. 23BX03048

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