bixy Posted July 8, 2012 Share Posted July 8, 2012 On another post someone has written that one feels "they're French so that they must know more than us". Well, when it comes to notaires here are two examples of them getting it completely wrong (unless I'm completely wrong, of course!).Friend A who is fiscally resident in France and only owns the house they have here, was told that on its sale they will have to pay French capital gains.Friend B who is fiscally resident in the UK and who is selling his second home in France was told, by a different notaire, that he would have to pay capital gains in France.Patrick Link to comment Share on other sites More sharing options...
NormanH Posted July 8, 2012 Share Posted July 8, 2012 These French people do know: http://vosdroits.service-public.fr/F10864.xhtml Exonérations d'imposition Les principales exonérations concernent les cas suivants : Vente de certains biens Résidence principaleThe second case will depend on the length of time the property was owned as explained on the link above.In the last week there has also been the question of additional 15.5 % 'Social charges' on the sale of second homes by non-residents (on top of any Captital gains) widely discussed on another thread. Link to comment Share on other sites More sharing options...
mellybelly Posted July 8, 2012 Share Posted July 8, 2012 Hi,Friend A situation is wrong..........no Capital gains.....as far as I know.Friend B situation is right..........Capital gains applies.......as far as I know.Your life in their hands eh !!!!Mel. Link to comment Share on other sites More sharing options...
bixy Posted July 8, 2012 Author Share Posted July 8, 2012 Are you sure? Friend C has just sold their second home here in France, all has gone through and the money is back in the UK. He did not pay any French CGT or CSG but will be paying CGT in the UK. I note that anyone selling a second home must declare the plus value on their tax return. How can a non-resident do this, since he/she will not complete a French tax return?Patrick Link to comment Share on other sites More sharing options...
woolybanana Posted July 8, 2012 Share Posted July 8, 2012 Advice to friend A is wrong.Friend B will pay capital gains and the new social charges on his gain in France if he has not owned the property long enough, and then UK capital gains as in the case of C (below).Friend C will pay the French taxes plus UK capital gains minus what he has paid, in France, but I am not sure if the social charges element is deductible from UK capital gains. If he has not paid in France then it may be because he has owned the property for a long time. Link to comment Share on other sites More sharing options...
idun Posted July 8, 2012 Share Posted July 8, 2012 Friend C's notaire should have dealt with any taxes owed on the property before giving them the money.Notaires........... we had a terrible one in our village for most of our time there, personally I wouldn't have trusted them with any thing at all, slippery and I never called them 'Maitre'. Probably thought it was because I was an ignorant anglaise, they were master of nothing, and never deserved that title. What are they these Notaires...........glorified tax gatherers who often don't do that properly. If EVER I say, ask a notaire, about anything at all.......I mean several. Then you'll probably find one that knows their business. Link to comment Share on other sites More sharing options...
NormanH Posted July 8, 2012 Share Posted July 8, 2012 [quote user="bixy"]Are you sure? Friend C has just sold their second home here in France, all has gone through and the money is back in the UK. He did not pay any French CGT or CSG but will be paying CGT in the UK. I note that anyone selling a second home must declare the plus value on their tax return. How can a non-resident do this, since he/she will not complete a French tax return?Patrick[/quote]Because the Notaire deducts (or should) any appropriate taxes, outstanding credits etc before paying the balance.It is possible there were no gains, or that the property had been owned for a long time, or that he entered into the category of poor pensioners who don't have to pay.. Link to comment Share on other sites More sharing options...
Chancer Posted July 8, 2012 Share Posted July 8, 2012 I knew one that was (and probably still is) as bent as bent can be, his wife was an immobilier and between them and a Parisien promoteur they succeeded in building several blocks of new flats in a town that already had a surplus and selling them to unwary investors at Côte D'Azur prices with fantasy rental projections, in fact were any tenant to have the means to pay these sums they could afford to buy or rent a chateau.This is nothing new, there are "Robien" villes the length and breadth of France, untenanted and with the owners having lost their defiscalisation and having to sell for less than half what they owe, the naivety of these aisé people never ceases to shock me, most did not even visit the town, if they had done they would have run a mile.Anyway this affair went beyond legality and the notaire was struck off, radié I think was the term, after a year or so all he had to do was sit his exams once again and he could practice once more, by all accounts he is now sought after by clients, a bit like the recoommendation of a good accountant [;-)]In time I may and dependant on my situation I well use him myself.Why do so many people assume that a Notaire would be competent and not make glaring mistakes? Perhaps they are making the mistake of comparing them to a UK solicitor rather than a functionaire in a comfortable protected profession. Link to comment Share on other sites More sharing options...
NormanH Posted July 8, 2012 Share Posted July 8, 2012 My Notaire made a major mistake, and It took me a year to get my money back, which I did by arguing my case directly with the tax office.I should probably ask the local 'Chambre de Notaires' to pay me damages, since they insure their member collectively. Link to comment Share on other sites More sharing options...
Debra Posted July 8, 2012 Share Posted July 8, 2012 [quote user="bixy"]Friend A who is fiscally resident in France and only owns the house they have here, was told that on its sale they will have to pay French capital gains.[/quote]I've heard and read about a few cases of this lately, where the notaire has insisted that as the seller hasn't owned the property for more than two years or lived in it for two years if they previously owned it as a maison secondaire, then they have to pay taxes on the capital gain.[quote user="bixy"]Friend B who is fiscally resident in the UK and who is selling his second home in France was told, by a different notaire, that he would have to pay capital gains in France.[/quote]Why is that wrong? Gains from French property are taxed in France as well as in the UK if tax would still be due after paying the French tax. I'm also not sure whether the social charges which are going to be charged are counted as tax paid by the UK because they're not mentioned in the same way as they are in other places on the treaty, maybe just because they weren't charged before or maybe because the UK have no intention of allowing this charge to negate the UK CGT even though it is classed as a tax because of the nature of it, ie what it was supposed to be for in the first place. Link to comment Share on other sites More sharing options...
allanb Posted July 8, 2012 Share Posted July 8, 2012 [quote user="bixy"] I note that anyone selling a second home must declare the plus value on their tax return. How can a non-resident do this, since he/she will not complete a French tax return?[/quote]It's quite possible that someone who is fiscally resident in one country, and therefore has to file a tax declaration there, may have to declare some things in another country also. I think that ownership of property is a possible reason, although it isn't the only one. Link to comment Share on other sites More sharing options...
Debra Posted July 8, 2012 Share Posted July 8, 2012 [quote user="allanb"][quote user="bixy"] I note that anyone selling a second home must declare the plus value on their tax return. How can a non-resident do this, since he/she will not complete a French tax return?[/quote]It's quite possible that someone who is fiscally resident in one country, and therefore has to file a tax declaration there, may have to declare some things in another country also. I think that ownership of property is a possible reason, although it isn't the only one.[/quote]As Norman said though - the notaire will deduct the tax anyway. At least that's what ours said would happen when we agreed a sale on some land we were selling - and we're resident. I believe if you're not resident then the notaire will likely hold back a percentage anyway, until sure everything that is due, including taxes, has been paid. Link to comment Share on other sites More sharing options...
bixy Posted July 9, 2012 Author Share Posted July 9, 2012 Well thanks for all those replies. It's not at all what I was expecting - or what I have told Friend B. He will be distinctly dischuffed when I put him right. He has had the house for about 25 years - am I right in thinking that he will pay tax on something like 50% of the plus value? Also does he have to pay the 15.5% CSG on the whole plus value or what? This chap was thinking of shipping the money back to the UK without declaring it to HMRC. I have strongly advised him against this, on the basis that the authorities are now in much close touch with each other (not to mention the fact that it's illegal and immoral).Patrick Link to comment Share on other sites More sharing options...
Debra Posted July 9, 2012 Share Posted July 9, 2012 3. French capital gains tax (plus values)If the property is your main residence, then you are exempt from capital gains tax on the sale. The simple rule is that you should be resident in the property at the time of sale which means when the initial contract or compromis de vente is signed. Once a sale has been agreed, it is possible to leave the property and move somewhere else before the sale on the French property completed as long as the time lag is not ‘ unreasonable’.If the property is not your main home when you sell it, then plus values may be payable. The basic rate of plus values for non-residents is currently 19% on the difference between the purchase and selling price. For those who are resident in France and who are selling a property that is not their main residence, the rate is 31.3%. This higher rate includes a social tax that does not apply to non-residents. You will be required to provide proof that you were residents outside France at the time of the sale in the form of a declaration from the Inland Revenue to that effect.Allowances are made for the costs incurred at the time of purchase such as notaire’s and agent’s fees. You can also offset the costs associated with the sale such as the cost of the survey reports mentioned above. There is a general allowance of €1000 for each seller so €2000 is allowed for joint owners, even if they are married. You can also offset the cost of works which could be described as construction, reconstruction or improvements that amount to ‘ a new element of comfort’ such as a new bathroom. The cost of renovating an existing bathroom or kitchen would not count. The tax authority will only make allowances if proper VAT invoices from a French registered builders are provided and very often evidence of payment is also needed.After allowances, the plus values liability is then reduced by 2% a year after five years of ownership, 4% after 17 years and 8% after 25 years. Thus after 30 years no capital gains tax is due.From: http://www.frenchconnections.co.uk/property-for-sale/property-services/selling-property-in-france.cfm*****************************But I thought I'd read something somewhere that said that Holland was on about changing it back to 20 years - anybody know??? Not sure what they do with CSG as it's never affected me but I'm sure someone else will know..... Link to comment Share on other sites More sharing options...
Debra Posted July 9, 2012 Share Posted July 9, 2012 So that's a reduction of 56% of the 'plus values liability after allowances' isn't it? re CSG - my guess is whatever figure he will be paying plus value tax on will be the same figure he will be paying 15.5% CSG on. Link to comment Share on other sites More sharing options...
Debra Posted July 9, 2012 Share Posted July 9, 2012 See here: http://www.notaires.fr/notaires/plus-values-immobilieres for an explanation and some examples (and yes, the CSG is on the same amount the plus value tax is on). Link to comment Share on other sites More sharing options...
Debra Posted July 9, 2012 Share Posted July 9, 2012 http://magimmo.seloger.com/a-la-une/fiscalite/francois-hollande-une-exoneration-totale-des-plus-value-t223823that article suggests 22 years - like before, before (ie now 30, before 15, before that 22)! Link to comment Share on other sites More sharing options...
Debra Posted July 9, 2012 Share Posted July 9, 2012 Note that he will also pay CGT in the UK but the amount of the French tax will be deducted. I'm not sure whether the CSG will be deducted however, as it looks like the UK might not consider the CGT as a tax to be credited, when you read Article 24 of the double taxation treaty. Link to comment Share on other sites More sharing options...
andyh4 Posted July 9, 2012 Share Posted July 9, 2012 [quote user="bixy"]Are you sure? Friend C has just sold their second home here in France, all has gone through and the money is back in the UK. He did not pay any French CGT or CSG but will be paying CGT in the UK. I note that anyone selling a second home must declare the plus value on their tax return. How can a non-resident do this, since he/she will not complete a French tax return?Patrick[/quote]Patrick The problem with these real cases that are however a little hypothetical is that without the numbers that lie behind it is impossible to make a realistic judgement about whether a mistake has been made or not. So for example:C could have bought in say 2007 when the exchange rate was 0,67GBP per €. Say a purchase price of 100k€ = 67000pounds.He sells in 2012 with an exchange rate of 0,82GBP per €. Say the sales price is 90k€ = 73800pounds - house prices have fallen since the peak of 2007. So a loss is made in France and no Capital gains, but a gain of 6800 GBP is made in the UK with an associated taxable capital gain. Case B sounds like the normal situation that will apply to many cases and while A sounds a little abnormal, it may be judged the A's principal resindence is somewhere else, even if the only home they own is in France - it was the case for me for a number of years. Link to comment Share on other sites More sharing options...
bixy Posted July 10, 2012 Author Share Posted July 10, 2012 Well, thanks again. I'm a lot clearer but I will in any case tell my friend to seek expert advice, as clearly my advice is not to be trusted!Patrick Link to comment Share on other sites More sharing options...
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