Whenadministration to appraise a villa using newspaper clippings

A company purchased a villa in a prime location in the south of France. It then estimated that 15% of the purchase price represented the value of the land and that the remaining 85% represented the cost of construction.

It therefore deducted depreciation expenses from its taxable income to reflect the impairment of the building.

administration subsequently audited the company and determined that the allocation between the land and the building was incorrect. In their view, the land had been undervalued, resulting in an increase in the depreciation deductions claimed for the building.

The reassessment was challenged all the way to the Administrative Court of Appeals, which first noted that, in principle, to challenge the value of a property,administration rely on comparable transactions.

When this method cannot be applied due to a lack of comparable properties, it can estimate the value of the structure based on the cost of reconstruction.

The Court then noted that the comparable sales method was not applicable "given the villa'sexceptional circumstances."

administration thusadministration set the construction price based on the cost of reconstruction.

The court based its decision "on information from news articles reporting on previous legal proceedings, according to which the cost of the work carried out by the former owner amounted to eight million francs in 1995."

administration thenadministration that this amount corresponded to interior finishing work and that, since the property was a luxury residence, the value of the structural work was, at most, equivalent to that of the interior finishing work.

The Court will, however, rule thatadministration could not assess the reconstruction value based solely on news articles, whose value is only relative."

It will also reject the Minister’s other arguments and set aside the assessment on that ground.

CAA Marseille, Oct. 16, 2025, No. 24MA00621

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