Plus Values ..... Macron

[idun]

Seen what M le President wants to do now, tax folk on the so called profit on their homes.

The example given on french news tonight was if someone bought for €200k ten years ago and sold for €250k now, then the €50k would be taxed.

This is no good for diy'ers is it, they could improve their home enormously and for all their labours, end up with a lot of tax to pay.

This is not about maison secondaires incidentally, this is about people's homes.

 Personally I think it malicious, vindictive and stupid and hope that it does not go through.

I am curious as to how people on here feel about this.

[EuroTrash]

I hadn't heard about that.

The only logic I can see in it is to support artisans and discourage DIY-ers, which is nothing new, it's what happens with maisons secondaires and I don't think that is a bad thing. But extending it to principal residences is out of order. IMHO.

Especially if he is going to change the goalposts for people who have already done the improvements, who might have decided to use artisans if this rule had been in force at the time.

What is wrong with that man ?????

[NormanH]

It is already the case for 'residences secondaires'

I just paid 36% of 'plus value' on the sale of my flat in the country.

I see no reason why people should not pay tax on the appreciation of capital assets just as they do on income they have earned.

I can remember hearing people gloating that they were making more money on the increase in value of their house than they  were by working and that seems  very skewed in favour of those who own property at the expense of those who work

I am totally in agreement with this measure, but don't expect it to pass.. The word 'home' is just emotional blackmail.

[EuroTrash]

Norman, so do you think this should be introduced in the UK as well?

"The word 'home' is just emotional blackmail." How sad when everything has to be reduced to € or £sd.

[YCCMB]

I had no idea that home ownership was an alternative to working. What a bizarre thought. If only owning a home bought groceries, paid for transport, covered the utility bills. I don't know about emotional blackmail, but I'm pretty sure I've been a frequent victim of institutional daylight robbery.

[richard51]

Great idea for the UK.

Would have helped reduce the disparity between the SE prices and the rest of the UK.

[alittlebitfrench]

@ Norman........what a very silly thing to say. Really stupid.

Your lack of knowledge of France is very scary.

[EuroTrash]

I came back to re-read this because I couldn't quite believe what I'd read, and I still can't get my head round it.

"I can remember hearing people gloating that they were making more money on the increase in value of their house than they were by working and that seems very skewed in favour of those who own property at the expense of those who work."

Even if you only earn around 20k a year, then for a property in France to increase in value by 20k a year, ie 200k over 10 years, would be quite exceptional.

As YCCMB says, the way you put it makes it sound like you think there are the people who own their own home on the one hand, and the people who work on the other hand. Whereas in fact, the typical home owner has to go out to work to pay the bills that come with home ownership, bringing up a family etc.

Maybe you could clarify what you actually did mean because either something has got lost in communication, or ALBF has summed it up.

[YCCMB]

I'm totally baffled now. Obviously, there's a branch of socialism that believes equality should have us all living in tents and eating twigs, or something.

There are many people living in the South East who have a choice between living in the South East and working, or not (to both). It's not always, or indeed often, a lifestyle choice. It's guaranteed that a huge proportion of the SE population would love lower rents and property prices. But unless someone stops Russian Oligarchs and Chinese or middle Eastern investors from coming in and buying up practically every new development within the M25, it won't happen. Property developers aren't charities.

And if it's about "tax the rich" then you've nothing to worry about. The government will help themselves to 40% of the value of your estate after the relatively small tax free amount allowed to your nearest and dearest, so if you bought your house in the South east thirty years ago, the increase in its value over the intervening years will probably see the exchequer creaming quarter of a million or so off your estate, which will absolutely not go towards homing deserving people. And if you are the less well off relative of a person who dies under the above circumstances, you can't even be granted probate until you have coughed up the 40%IHT. The government helpfully suggests you might like to take out a loan so you can pay them, if your own means don't stretch to having a spare 250k or more. And woe betide you if you are that person after April,when it will also cost you around £2.5K to apply for probate on an estate of more than (IIRC) 50k.

So the money you never had (because you can't spend your house) is well and truly clawed back by the government the minute you pop your clogs.

And let's never forget those immortal words "the value of your investment can go down as well as up"

ETA. There's a large proportion of people in the SE who extend their homes, not primarily to increase the value, but because they can't actually afford to move to somewhere bigger. So it seels there are some who would advocate them either spending even more to do so by only employing tradesmen, or being taxed to the hilt if they ever come to sell. Or sleeping four to a bedroom, perhaps, just to be sure they get their left wing creds?

[richard51]

Money for nothing:

https://parispropertygroup.com/blog/2017/how-paris-real-estate-prices-evolved/

[EuroTrash]

Richard, we're talking about primary residences here.

So yes, if you used to live in Paris and you decide to move to the country you will be euros in.

But if you want to move to a larger home in Paris, you're not going to profit from the increase in overall values. If the value of your property has doubled, then the value of the next property you buy will likely have doubled too. Look at it this way: if you're taxed on your gain, you would not in fact be left with enough from the sale to buy the property you have just sold.

[richard51]

But what if you wish to eventually downsize?

[EuroTrash]

"But what if you wish to downsize?"

I don't see what you're getting at.

If you downsize you would normally expect to end up with cash in the bank to balance out owning a lower value property. I don't see why deciding to downsize should mean deciding to reduce your net worth, so if your property is worth less, that should be reflected in the rest of your estate.

If your plus value is taxed, you will end up with a lower net worth. You might break even in terms of what you get from the sale and what you spend on the purchase, but your new property will be worth less.

[EuroTrash]

"And let's never forget those immortal words "the value of your investment can go down as well as up"

Yep, would be fair if the government gives you a credit d'impôt if you sell at a loss.

[idun]

I have no idea what has happened since we left, but I did check and our french home had gone up with normal inflation.

In comparison to friends who had paid a similar price at the same time in the UK for theirs. When we sold, theirs was valued at nearly three times the value of ours.

We had moved to an expensive France that subsequently kept prices at a reasonable level, and the Uk property market, well, my comments about the way that has worked....... you would just end up with it being censored.

I think that it would be a great idea to do this in the UK, but there you go.

How it has changed in France since we left may be another story.

[richard51]

Onwards and upwards?

If neither upsizing or downsizing, then by just sitting on your estate if it is in a house in Paris or London then your capital is increasing at a larger rate than if it were in held in cash or in another part of either country.

So why not equalise a bit - it might attract companies and people out of the capitals.

In terms of investments going up or down, then that is pretty obvious, but the whole economic system is predicated on continual expansion. Why one might ask?

[NormanH]

To repeat, but in a positive form:

People  not pay tax on the appreciation of capital assets just as they do on income they have earned.

[EuroTrash]

OK Norman, what is your answer to the situation where a person buys a house for say 200k euros. 40 years later they have become elderly and they want to move to a property of equivalent standing and value, but on one floor rather than three. In the meantime, property prices in the area have doubled. They sell for 400k euros and because they've made 200k "profit" they pay tax of say 40k. Which in real terms leaves them 40k short of being able to move sideways to a home of equivalent value to the one they had. Does that seem right to you?

[woolybanana]

This only works if you deduct from the profit the equivalent of the rent that the owner would have paid if they had rented in that area for the period of time in question. Plus their time and costs used in improving the property.

Frankly, it is just another effort to smack the middle classes and is stupid

[richard51]

? - surely the owner has had the benefit of living there and not paying rent. So ...work it out.

[alittlebitfrench]

What about a rural French family who have worked on their house over the years (like most do) and it has gained in value.

They have to sell and move to a city for work.

They have 4 bed in rural France but after selling (less this stupid idea of a tax) can now only afford a 2 bed flat.

Macron needs all the tax he can get to support is EU aspirations. Please stop giving him ideas.

He will tax your grandma given the chance.

[woolybanana]

Duh, yes, but one has to live somewhere. Why should one pay a-tax on living?

This is justanother ploy to dodgethe issue of excessive State spending. Cut it by 10% minimum.

Anyway, the State gets the money in Death Taxes, eventually.

As a matter of fact, if you buy, do up and sell a principal residence too often, the fisc will be after you as it will be considered a job and any gain therefore taxable.

[richard51]

Ok, I agree with the state spending in France, but likewise think it should be increased by more than that in the UK.

Yes, indeed, one does have to live somewhere, but I suspect that paying the rent to a private landlord for an equivalent property would be much higher than bills for living in your own place.

[EuroTrash]

It's probably nearly time for Macron to pull the fictitious rent idea for owner occupiers out of the hat again, France seems to float the idea every 10 years or so, I think Sarko was the last to bring it up. Owner occupiers have to declare the rental income that they would get if the property was rented out rather than owner occupied (fictitious because they haven't received it) and pay tax on it. I believe Switzerland has this system and calls it "imputed rent".

[richard51]

ALBF - your argument really supports the lowering of city prices - this is a way of doing it.

It is choice to move to a city btw.