One-eyed-Jim Posted October 16, 2011 Share Posted October 16, 2011 We are just about to sign for a new, smaller house which will need some renovation work. The current house is not yet sold, so we are planning to declare the new house as a secondary residence in the meantime, thus allowing the eventual proceeds of the larger house to be free of any CGT worries. Is there any financial drawback to starting the renovations on the new house straight away, i.e. while it is a secondary residence? (This was in effect the whole point of the exercise, to be able to renovate while living elsewhere.)I have been working on the basis that, say, 10 years down the line, the new house will have been our main residence for about ?90% of that time, and so the cost of renovations would simply be allowable in the same percentage as being on a main residence. Is this too simplistic?Jim Link to comment Share on other sites More sharing options...
Sunday Driver Posted October 16, 2011 Share Posted October 16, 2011 There is no requirement to 'declare the new house as a secondary residence' - it's simply a second house that you own. Nothing to stop you carrying out renovation works straight away on the new house.Once you have sold your old property and moved into your new house to live, it then becomes your principal residence and if you sell it 10 years down the line, there will be no capital gains liability therefore an allowance for renovation costs doesn't arise. Link to comment Share on other sites More sharing options...
One-eyed-Jim Posted October 16, 2011 Author Share Posted October 16, 2011 That's very interesting - suppose we cannot sell the larger house for several years (oh, please, no!), would the other house not become a maison secondaire at some point? I have been asuming we would have to pay higher taxe fonciere on it, for example.Jim Link to comment Share on other sites More sharing options...
Sunday Driver Posted October 16, 2011 Share Posted October 16, 2011 If you decide to move into the smaller house before the big house has been sold, then provided it remains empty and not let out, then the tax office will allow you to retain its 'principal residence' exemption from CGT for a period of time to compensate for the slowdown in the French property market. The current discretionary period is around two years. After that time, if the big house is still unsold, then you lose that exemption and it becomes liable to CGT when it is eventually sold. Link to comment Share on other sites More sharing options...
One-eyed-Jim Posted October 17, 2011 Author Share Posted October 17, 2011 That's good - thank you for the help.Jim Link to comment Share on other sites More sharing options...
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