CGT confused ???

[connolls]

Hi,

We may well be in a similar situation (i.e. having to sell our french house)

BUT our situation is different in that we don't own a house in the UK and our french house is our only owned home.

(We stay with patient relatives in the UK) and spend time in the house in France when we have time off work and can afford to go there for varying lengths of time.

We have owned and renovated the house since 2000.

How would capital gains apply in this situation ? And what counts as being resident in france to avoid CGT as this is our only owned home..............do we have to "live" there for a certain length of time?

Maybe too many questions to answer in one go but thought I would ask.

Thank you for any information.

Best Wishes Mel x

[Mac]

I thought that to avoid capital gains tax you had to be tax resident-that is pay your income tax ect. in France and not in GB. I'm probably wrong but if this is the case I'm sure someone will put me right.

[thehepples]

Found at http://www.frenchentree.com/fe-legal/displayarticle.asp?id=1908

Looks like you will pay CGT, just like me. Do a google search on "france tax cgt"

QUOTE One of the most frequent misunderstandings is caused by the fact that you can only call your “home” your “principal residence” if you are formally tax resident in France.

Barring any very specific exceptions, covered by the Double Tax Treaty, your residence of France begins from the date that you move to France with the intention of living here. Accordingly, it is perfectly logical to assume that your French home becomes your “principal residence” from that date.

However, many people have already been subjected to the actual practical guidelines laid down for the Notaires, who are responsible for deciding whether capital gains tax is payable, and for eventually collecting that tax. The guidelines logically state that, unless you can show that you are paying taxes in France, your French “home” cannot be your principal residence.

In practice, the problem is that, until that person has actually submitted his/her first French income tax return (which can be anything up to 17 months after your actual arrival), the person is not actually registered in the French tax system, as a French tax payer. Hence, were the person to sell this property before making their first tax declaration in France, if the Notaire wants to deduct French capital gains tax from the proceeds of the sale, in respect of any gain made by the seller, he is perfectly able to do so.

In fact, the actual guidelines, originally received by the Notaires, recommended that two tax returns be obtained, so as to ensure that the seller had been resident in France for at least a full tax year, but this guideline does not appear to be applied in practice.

END QUOTE