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Capital Gains Tax on UK house?


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Am i right in assuming:

If i move to france (to live permanently in my french house) and sell my UK house 4 months later i will pay french capital gains tax on the profit because my UK house is my 2nd home?

So anyone currently renting out their UK property is also subject to french cap gains tax if they later decide to sell this property?

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Inland Revenue have in the past allowed up to two years to sell a property that was previously your principal residence before it becomes subject to CGT. I don't know if this is still the case.

You, and your wife or partner, if the house is jointly owned, can set off your capital gains allowances for the year against any taxable gain made on the house, if it's outside the 2 year(?) period allowed for selling.

Gains on property in UK are index linked, (or used to be) so only that part of the capital gain that exceeds the rise in the appropriate index during your years of ownership can be deemed taxable.

You should ask an accountant, but this is my recollection of the rules.

Sorry, I've just realised you were talking about French CGT, about which I know next to nothing.

Patrick

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I was assuming french capital gains tax would apply as i would be french resident and therefore under their rules, even though the house is in the UK.

If this is wrong, then someone please correct me!
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We sold a previously-rented-out house in Britain (within the time limits Patmobile refers to) a couple of years ago and did not have to pay either UK or French capital gains tax.

That must have been correct at the time as Mrs C used to work for the UK Inland Revenue before getting into selling houses in France.

French CGT rules have changed since then, in 2004 (and were increased in Jan 2005 if an article in May Living France is to be believed) but as far as I know sales of houses elsewhere are not affected. We did shortly afterwards buy another house in England that isn't rented out so that could have affected the situation, but I don't think so. Of course, all might change in UK after tomorrow's election.

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  • 2 weeks later...

If you were subject to French capital gains then the gain would be the increase in price between when you became resident in France and when you sold it. Unless house prices are really shifting, a four month delay wouldn't be liable for any tax as any increase would be eaten up by solicitors fees etc.

In any event, I would have thought that you'd have been exempted from considering it as a "second home" for such a short period. If that wasn't the case, the French themselves would constantly be paying capital gains tax whenever they moved house unless the buy and sale dates were always the same (unlikely given that there is no "contract chain" in France).

Under UK law, if you're living in France on a "temporary" basis you can retain a "main home" (ie one that's not subject to capital gains tax) in addition to any home that you have in France. I know people who have been able to retain this "temporary" status for a number of years with no problems as their employment contract here was never made permanent.

 

Arnold

 

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