Second property in France...
Discussion
Reading up about this; as usual, I'm left in a muddle.
We own one property in France - is this considered a primary residence - despite our true primary residence being in England?
If we buy a second property to let out via AirBNB / Owners Direct - this would, of course, be a second French property. What are the tax implications for this? Will there be any additional charge upon purchase? And what is the cost when selling a second property in France?
We own one property in France - is this considered a primary residence - despite our true primary residence being in England?
If we buy a second property to let out via AirBNB / Owners Direct - this would, of course, be a second French property. What are the tax implications for this? Will there be any additional charge upon purchase? And what is the cost when selling a second property in France?
Someone a little better qualified should be able to give you the details better than me but broadly speaking if you live in England your french house will be a maison secondaire , I would guess buying another won't have any tax implications until you start earning an income from it .
Just be aware that second homes in France attract a very heavy capital gain tax when you sell , especially if you carry out improvements yourself , if you want any tax relief when you sell you have to supply invoices from the artisans who did the work , if you do the work yourself you don't even get relief on the materials , I know from experience !
The notiare does the tax calculation and deducts the tax at point of sale , this happened to me when I sold my first french house .
Put it this way , I built a new house by myself over the past few years on a scrap piece of land I kept , if I sell it I'll be lucky to get my financial investment back , I've worked for free holidays ! the tax used to reduce after ten years on a sliding scale but I believe it changed a couple of years ago .
Just be aware that second homes in France attract a very heavy capital gain tax when you sell , especially if you carry out improvements yourself , if you want any tax relief when you sell you have to supply invoices from the artisans who did the work , if you do the work yourself you don't even get relief on the materials , I know from experience !
The notiare does the tax calculation and deducts the tax at point of sale , this happened to me when I sold my first french house .
Put it this way , I built a new house by myself over the past few years on a scrap piece of land I kept , if I sell it I'll be lucky to get my financial investment back , I've worked for free holidays ! the tax used to reduce after ten years on a sliding scale but I believe it changed a couple of years ago .
Ouch!
We can spend three or four months in France so it seems even our one French home will be considers a second home... wow. What is the CGT on sales currently?
As well, if we moved over and stayed a year - so that it was at least for one year of ownership - a first home; I wonder how that would skew things, perhaps in our favour?
We can spend three or four months in France so it seems even our one French home will be considers a second home... wow. What is the CGT on sales currently?
As well, if we moved over and stayed a year - so that it was at least for one year of ownership - a first home; I wonder how that would skew things, perhaps in our favour?
LDN said:
Ouch!
We can spend three or four months in France so it seems even our one French home will be considers a second home... wow. What is the CGT on sales currently?
As well, if we moved over and stayed a year - so that it was at least for one year of ownership - a first home; I wonder how that would skew things, perhaps in our favour?
I'm not sure of the exact percentage the tax is , but it is on your total gain less purchase and as I said , costs proven by invoices of registered tradesmen in the french tax system , no receipts , no relief , it's pretty much cast iron , I sold a house and thought I was in for a decent profit , cost just over 10k euros in tax , I made a little profit but scored a free building plot , or at least that's what I tell myself in order to make me feel better about it ! We can spend three or four months in France so it seems even our one French home will be considers a second home... wow. What is the CGT on sales currently?
As well, if we moved over and stayed a year - so that it was at least for one year of ownership - a first home; I wonder how that would skew things, perhaps in our favour?
I think in order to have it classed as a primary residence you basically have to become french , live there and pay your taxes there . I've looked into it a few times and it's basically impossible , search the french living forums as there are a few informative people on them .
YankeePorker said:
Secondary residence they hit you for 50% tax on the profit when you sell, assuming that the property has increased in value. This is why investing in improvements can be tricky as you can struggle to get your money back out.
Can you let me have a link to where you found this information please?Steve
Most of the French expat sites have some pages devoted too this. I found this quite useful and as far as I know accurate
http://www.french-property.com/guides/france/finan...
Essentially you'll pay about 35% tax on any gains that you can't justify but there is a taper that sets in from 6 years and rises to 100% after 30 years. Bear in mind though that you could also in some circumstances be liable to UK CGT if that is greater than the French CGT. Our situation is slightly different in that we live in France and would like to sell our UK house but would have to pay a substantial CGT bill somewhere but take advice as this is complicated and changes often.
Living here is also a good way to avoid it but you would need to live in France and pay taxes here for at least a full year and possibly two. 3 or 4 months residence might be enough to qualify as resident if you spend the rest of the time in different places e.g. 2 months in Spain, 3 months in UK, 2 months US etc
http://www.french-property.com/guides/france/finan...
Essentially you'll pay about 35% tax on any gains that you can't justify but there is a taper that sets in from 6 years and rises to 100% after 30 years. Bear in mind though that you could also in some circumstances be liable to UK CGT if that is greater than the French CGT. Our situation is slightly different in that we live in France and would like to sell our UK house but would have to pay a substantial CGT bill somewhere but take advice as this is complicated and changes often.
Living here is also a good way to avoid it but you would need to live in France and pay taxes here for at least a full year and possibly two. 3 or 4 months residence might be enough to qualify as resident if you spend the rest of the time in different places e.g. 2 months in Spain, 3 months in UK, 2 months US etc
I don't want to be a pessimistic sod but also check about taxation if you die and leave property in France.Things are different if it's a second or third home,resident or non resident.Have you got a French will for your French assets.It's true you can now ask for an English will to take precedent to divvy up your assets to circumvent French succession rules but check the tax situation as the French system is a lot more generous with donations etc.
I hope this makes sense.
I hope this makes sense.
The rules and taxes related to property in France have changed a bit since we first bought our house - 12 years ago now. I am not sure how much of an issue this is because in rural France property prices have not risen much (may even have gone down) and apart from some key areas (ski resorts, Paris, fashionable coast) house prices do not go up in the same way they have in the UK. Important to keep or acquire receipts for all work and at point of sale there may be some negotiation regarding cost of fittings etc - even the kitchen! This would be in the interests of both the seller and the buyer. Remember also that as a UK resident would need to declare the sale of a maison secondaire for CGT so if the French don't get you HMRC will! No winning here - just enjoy it!
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