French Taxes

[Mattyj198]

Hello everyone!

We are buying our first house in France. Everyone over in Canada thinks we are crazy because of the taxes. I keep hearing this and I am getting confused. I know what the property tax is for the house we are buying and I know how much approx. the utilities are going to cost.

We also have friends who are currently living in France and they are moving out of France to Turkey because of the taxes.

Is it income tax they are talking about? If so, we are not going to be living there, working or even renting the house out. It will just be a home to spend a month or 2 in during the summer and winter months.

So my question is, Is there a tax I don't know about?

Thanks

Matt

[Patf]

Perhaps your friends are working and are complaining about the "cotisations" - like the UK national insurance contributions. They are notoriously high. (do a search .)

The other one is a wealth tax.

Can't think of any other taxes, especially if you won't be technically resident.

[phylisbide]

Taxe d'habitation

Taxe fonciere

We also have to pay a small amount towards local services, bins etc - residence secondaire.

We only visit for holidays too. pb

[parsnips]

[quote user="Mattyj198"]Hello everyone!

We are buying our first house in France. Everyone over in Canada thinks we are crazy because of the taxes. I keep hearing this and I am getting confused. I know what the property tax is for the house we are buying and I know how much approx. the utilities are going to cost.

We also have friends who are currently living in France and they are moving out of France to Turkey because of the taxes.

Is it income tax they are talking about? If so, we are not going to be living there, working or even renting the house out. It will just be a home to spend a month or 2 in during the summer and winter months.

So my question is, Is there a tax I don't know about?

Thanks

Matt[/quote]

Hi,

      If you only spend 2 or 3 months here per year, you will not be fiscally resident , so you will pay only the taxes connected with yor house--tax fonciere, tax d'habitation, and , possibly, a garbage collection charge.

     You can find out how much these are during the purchase process.

      Trying to make a living in France by working or running a business , as opposed to just holidaying, is much more heavily taxed. The "impot sur le revenu"-income tax- is fairly light, but for workers and business people,the so-called "social charges" -which are an income tax in disguise- are punitive.  

[Sprogster]

Parsnips, as non EU residents, they will be liable to the much higher CGT rate of up to 33%, when they sell the property and even as non residents they still have a French inheritance tax exposure, which many double tax treaties do not provide for.

[bettyboop]

There will also be insurance on the property in addition to Taxe Fonciere,Tax d'habitation and Tax Orderes (sp) (bins)

[nomoss]

Hi Matty

As non residents in the EU, you would pay 33 1/3% Capital Gains Tax (Plus-value), unless you happen to be citizens of an EU country, Iceland or Norway, or of a country with an appropriate tax agreement with France, or previously resident in France,  in which case you would pay 16%.

Note that if you were French residents selling a second home you would still pay 16% CGT, PLUS 12.1% CSG, i.e. 28.1% - not a huge difference.

In all cases the calculation of the taxable amount is the same, so liability would reduce by 10% p.a. after the first 5 years, and there would be no tax due after 15 years.

Unless prices rise in the future at the exceptional rates of the last few years, by the time one deducts the purchase price, costs of buying, repair and construction costs, costs of selling, and 1000€ for each spouse (if owned in joint names), there won't be a lot left to tax anyway[:)]

 

[parsnips]

[quote user="Sprogster"]Parsnips, as non EU residents, they will be liable to the much higher CGT rate of up to 33%, when they sell the property and even as non residents they still have a French inheritance tax exposure, which many double tax treaties do not provide for.[/quote]

Hi,

      I assumed the OP was buying for their own use and not as an investment. As CGT ,at whatever rate, is only applied to any profit made at the sale , then should the OP sell in future and have to pay CGT at 33% they will still retain a net profit of 67%, and have had the pleasure of the house during their ownership.

      As for inheritance tax , if the OP is married they can buy in tontine , and I assume that the surviving spouse would then either will the property to children (156 974€ tax-free each), or in the absence of direct line heirs, they could sell.