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Capital Gains Tax - perhaps one worries too much ?


Owens88
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That sentiment is really for those of us who are Brit taxpayers / residents.

OK French CGT is at 15/16% reduced by an amount per year after the fifth year of ownership and also reduced by certain costs (purchase + improvement). Local residents pay 11 % more .

BUT (I think the following is true)
After the bill in France we pay a UK assessement of our CGT. On UK rules and reliefs  (if any). Minus what we have paid the French taxman ?

By the way.

Is there any notion of roll-over relief - i.e. if selling one house and buying another within a set time period ?

 

 

 

 

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I have always thought that the worst situation would be someone (UK resident) who buys a cheap place, does it up themselves but then realises that it isn't quite the right place.

So they sell the existing property hoping to buy something more suitable at the same price.......Which of course means 10% notaires fees , and a similar whack to the Estate Agent.

They then find that the work they have DIYd isnt deductible so they get hit for

16% in France and then another 24% in the UK. and so find that they can no longer afford the "same price "property.

 

PS Has anyone managed to persuade UK Revenue to accept DIY bills as a way of reducing UK CGT liability, even though they weren't acceptable in France?

 

 

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"16% in France and then another 24% in the UK. and so find that they can no longer afford the "same price "property."

To avoid any confusion am I right in assuming that the additional 24% in the UK was to make  the total payment due upto an UK CGT rate of 40%.  If this was the case, I think it is important to point out that the increase for standard tax rate payers would be only another 4%, as the UK CGT rates are  20% for basic-rate taxpayers and 40% for higher-rate taxpayers.

Baz

 

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Well, in order to avoid paying the social charges which would be due from a French resident, you have to prove to the notaire where you do live. He notifies the Fisc of any taxes paid, and they then talk to the UK Revenue.

As an example when we originally purchased in France, within 12 months we had an enquiry from my UK tax office, asking why I hadn't declared any rental income from my recently acquired French property!

 

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Working on the assumption that both tax authorities know what you do, or will catch you in the end,  my basic point was that however much you end up paying the French tax system matters not, because the British expectation will be a higher one and therefore a top-up will be needed.

If I am incorrect I apologise. But if I am correct I believe it to be a point that is generally underplayed. With people scurrying about to save a few100€ on a French tax bill only to end up paying the full gap to British tax bods anyway.

 

For me I still hanker after real chapter and verse about whether roll-over relief (or equivalent) applies if one sells and then buys again within a given period.

Cheers

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"Working on the assumption that both tax authorities know what you do, or will catch you in the end,  my basic point was that however much you end up paying the French tax system matters not, because the British expectation will be a higher one and therefore a top-up will be needed "

This is not true, because the UK has additional CGT allowances not available in France.  Such as an annual exemption per person currently £8500, tapering relief and CGT tax rates dependent on income for the year of disposal. For example a property that I disposed of in France after 14 years meant I had a small liability to pay for French CGT but none in the UK due to their CGT allowances.

Baz 

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This thread has some interest for me, and I wonder if I could tag my own question on to it.

We are considering selling our principal residence in France, a property that includes within its outbuildings 3 very high quality and popular holiday cottages that we have created.

In 2004 we changed our marital regime to Communaute Universelle and this property was revalued in the act at a much higher figure than we had paid for it in 2000.  I understand that change to our marital regime could be considered to constitute a change of ownership. 

We assume that on the sale of the property French capital gains tax will be payable on the proportion of the value of the property deemed to constitute the holiday business.

Leaving aside the question of how this proportion would be calculated, and/or negotiated, does any forum member know which base value and date of acquisition will apply - the original purchase price and date, or the date of our "new marriage" in France?

Patrick   

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