Capital Gains Tax

[Trentedeux]

Can anyone on the forum advise or point me in the correct direction, concerning this matter.

I have been told that you have to pay this tax even on your principle property.

Surely not, is this true? as I am considering a move, but still in france.

But if I have to pay a load of tax this will effect the type and size of property that we can buy.

We will try and find an advisor but it is nice to have some idea of what they are going to say.

[Boiling a frog]

You do not pay  CG tax on your principal house however you will have to satisfy the notaire that it is your principal house and that you are a resident in France Usually you prove this by showing that you have submitted  income tax returns to the French authorities.

[Trentedeux]

thanks for the prompt reply,

I am retired and do not pay income tax, so what happens then?

Any ideas?

[LesLauriers]

Even if you are retired you should complete a French tax return, if your income is low you may benefit from reduced or no tax d'habitation.

If you wish to avoid paying capital gains tax you should visit your local French tax office and complete a return asap!

[Mikew]

Even a retired person resident in France must have some income to live on, - pension from UK, income from savings etc. All this income, wherever it arises must be declared to the Fisc yearly even tho' you may be below the tax level. Sale of permanant residence in France tax free, providing that you don't make a habit of it and buy and sell houses for profit!

[flick]

The regulations concerning CGT have recently changed in France, I believe that there was an article recently in Living France, possibly c.six months ago. I would strongly advise a visit first to the local immobilier who would handle your sale and then to the notaire; I think that Blevins cover the matter in one of their books which you may order online

[Evianers]

Hope I am not telling a porky here, but as many of you know, we are still resident in Belgium at present where we rent a house, but for 10 years now have been filling in a French tax return and have obviously owned a house there. When we sold this first house to purchase another, despite the above, we had to pay CGT. It was at the time our only owned house but there was no question of getting away from the dreaded CGT, so I suppose it depends on one's circumstances.

[Will]

[quote]The regulations concerning CGT have recently changed in France, I believe that there was an article recently in Living France, possibly c.six months ago. I would strongly advise a visit first to the l...[/quote]

The regulations changed at the beginning of 2004, and the current position has been discussed many times on this forum. There was an article in the May 2005 issue of Living France, from a solicitor, which suggested that the CGT rules had changed in January 2005. However the change that the author was referring to was a slight increase in the CSG/CRDS element, which is paid only by French residents selling secondary homes, so although most of the article was correct the all-important rate of CGT for non-French residents was not. To recap, it's 16% for EU residents, additional social taxes raise this to about 27% for French residents, while it remains at 33.3% for those normally living outside the EU.

[Hereford]

Anyone know (Will!): what happens if the house you are selling was built for one's parents to live in, then after their death one wishes to sell. Based on oneself being a french resident, taxes paid etc. Parents too permanently in France until death.

This is a scenario that will eventually happen to us and we wonder whether the authorities would treat this as a "second home" - which it clearly never was.

Any thoughts appreciated, altho we hope we will not need to know for several years yet!

Thanks

H.

[Will]

When we bought our first house in France, at the signing of the final acte the seller was a little disappointed to be told by the notaire that there was a small amount of capital gains tax to be paid on the house (that had been built in the 1930s by his father). This is because he had only owned the house for I think 20 years, and under the old rules tax was payable up to 22 years (it is now 15 years). So unless this changed too in 2004 it would seem that tax is payable on profit resulting from selling a secondary house which was an inheritance.

I suppose if you moved into it and notified the tax authorities that you were living there it would become a principal residence? Maybe inheritance tax is allowable against the gain, which, with the various allowances, would make the actual sum pretty small in most cases?

I think you need to ask a notaire - there shouldn't be any cost involved in giving advice like that.

[Trentedeux]

Thanks everyone for your replies, it is all quite confusing, we are hearing so many different comments, so we have made an appointment with a notaire next week, and we will post the relevent comments here afterwards. hope all is well for us in our new adventure in france.

Alan & Maggie.

[Hereford]

Thanks Will.  I'm afraid I was not very clear in my question.  We already own the house my parents live in, we live in our own house (also in France).  We built the house for them but may wish to sell it if/when they die.  There is no question of inheritance therefore.

We just wondered whether one's parents counted the same as living in it yourself.  We would not need or want the house - it is 3km from our own house.  We hope we will be too old to be worried by renting it out by the time they die (they are aged 82 but very fit).

Thanks

 

H.

 

[Will]

No problem Hereford. It's a difficult one, but I rather think that the tax man would regard the house as the equivalent of being rented out by you to your parents (even if they don't actually pay any rent) and thus liable to plus value. If you'll have owned it for 15 years by the time the occupants pass on there won't be any tax to pay - it reduces quite sharply between the 5th and 15th year of ownership. But I think you really need an expert opinion.

[Hereford]

Thanks Will.  We hope nothing will happen for a bit, and rules change so we will probably wait and see, or ask a Notaire if we see one for any other matter.

Regards

 

H.

[Bobdude]

[quote]Even a retired person resident in France must have some income to live on, - pension from UK, income from savings etc. All this income, wherever it arises must be declared to the Fisc yearly even tho'...[/quote]

This is of interest to me as I have not yet been able to find out what, if any, is the income below which a couple do not have to pay income tax in France. In the UK each person has an allowance of about £4500, but I understand in France there is joint taxation of spouses (?)

[LesLauriers]

Take your earned income (salary or pension) deduct 10% ( max 3268€ for pension) then another 20%, then, for a couple, the first 8524€ is tax free.

[Bobdude]

Thank you! We have filled in our first French returns this year, but at those calculations I don't think we have any income tax to pay.

[Teamedup]

Lurcher, there is usually a form inside the tax return that we keep and where you can work it out yourself. Unless you have anything odd on your form it is pretty straight forward.

 

Or you could do a trial run on the impots web site, that will also tell you how much you will owe, or not ofcourse.