What financial / legal implications are there to letting out your 2nd home in France?

[mikeh]

Someone told me that if you let out your property in France it affects your CGT when coming to sell. Is this right? Can anyone point me in the direction of a guide to letting out your French home?

Thanks in advance,

Michael

[EuroTrash]

I think if it had been your permanent home and then you let it out prior to selling it, it would lose its permanent home status and you would become liable to CGT, whereas if it had remained your permanent home up to when you sold it, you wouldn't. But if it's a holiday home then you are potentially liable for CGT in any case so I don't see it makes any difference in that respect.

You would declare the rental income and pay tax on it in France, and if you live in the UK you'd also declare the income in the UK under the DTA.

Beyond that, formalities and obligations would depend on whether you intend to let it out long term or as tourist accommodation.

[parsnips]

[quote user="mikeh"]Someone told me that if you let out your property in France it affects your CGT when coming to sell. Is this right? Can anyone point me in the direction of a guide to letting out your French home?

Thanks in advance,

Michael[/quote]

Hi,

As to the letting side , there are guides on various expat sites , this is a good one:

http://www.french-property.com/guides/france/working-in-france/letting-property/intro/

Regarding CGT , if you are non-resident in France and a EU citizen-  and have been fiscally resident in France for at least 2 years at any time in the past, you can sell your second home free of french CGT provided it is not let in the year of sale and the year  preceding 01/01/ of the previous year . Art 150u Code General des Impots- See here;

https://www.legifrance.gouv.fr/affichCodeArticle.do?idArticle=LEGIARTI000028426733&cidTexte=LEGITEXT000006069577&dateTexte=20140101&oldAction=rec

"2° Au titre de la cession d'un logement situé en France lorsque le

cédant est une personne physique, non résidente de France,

ressortissante d'un Etat membre de l'Union européenne ou d'un autre Etat

partie à l'accord sur l'Espace économique européen ayant conclu avec la

France une convention d'assistance administrative en vue de lutter

contre la fraude et l'évasion fiscales et à la condition qu'il ait été

fiscalement domicilié en France de manière continue pendant au moins

deux ans à un moment quelconque antérieurement à la cession.

L'exonération mentionnée au premier alinéa du présent 2° s'applique,

dans la limite d'une résidence par contribuable et de 150 000 € de

plus-value nette imposable, aux cessions réalisées :

a) Au plus tard le 31 décembre de la cinquième année suivant celle

du transfert par le cédant de son domicile fiscal hors de France ;

b) Sans condition de délai, lorsque le cédant a la librhCodeArticle"