Selling...

[Steve]

What is the tax situation when selling?

I have been renovating a barn for 4 years. Incompetence, laziness and theft mean that I've spent about 50k euros on top of the original 38K price, but only about 20K to registered builders. It's still far from habitable.

AIUI until last year you could claim cost of materials plus 3xCoM in labour for work you did yourself. Does that not count at all now?

I'm currently looking at an offer of 70K, so I'll be losing 20K anyway; but will I also be paying tax on the 32K notional 'profit' less the 20K reg builders costs?

The barn is my only owned property - I'm living nearby in a rented place. So can I claim that it's my main residence (and if I did, would that open up a whole new can of worms)? I pay taxe d'habitation.

[Will]

You could claim it as your principal residence, but you would have the job of convincing the notaire handling the sale, and quite possibly les impôts, of that. Which could be difficult as you rent another house nearby. Had you thought of this before, you could have given the address of your barn to les impôts, and having made your tax return from that address, it would have been much easier (though maybe not strictly legal [;-)] ).

The current rules say that, after 5 years of ownership, you can claim a 15% reduction in capital gain to cover repairs etc, so you do not  necessarily need invoices. However, if you do have valid and allowable TVA invoices for 20,000€ they can be offset against your 32,000€ gain - that's rather better than 15%. You can also offset any legal and agency fees incurred in buying and selling, plus a few other small allowances (see www.notaires.fr).

The allowance for cost of materials and own labour no longer applies.

You will pay plus value at 16% on the gain of about 10,000€ (assuming your builders' invoices are allowable, and further allowances of 2000€,  you will probably be able to claim more), plus, because you are French resident, another 11% in CSG/CRDS/PS.

[Steve]

Sorry Will, I don't know how I didn't thank you - I think I just got caught up in the ongoing nightmare. 18 months later, and I've spent another 30K euros with another set of greedy incompetent builders and the barn is still very far from finished (though the roof is now insulated!)

So, a very tardy thanks   8-)

[ams]

I think their is a clause within the CGT legislation that may be of some assistance to you. essentially it says that residents are exempt from CGT on the sale of a second home in France provided they don't own their PPR and havent done so for at least the previous two years and provided that the sale of the second home takes place at least 5 years after its acquisition or completion.

 

You need to verify the above with an Inspector of taxes at your local hotel des Impots CGT section, as the local Notaire generally does not have a high level of taxation knowledge.

 

Hope the above helps.

 

ams

[Gastines]

With the amount of money many people seem to be losing on CGT etc.Surely it would pay to register for the tax year and stay put for a while? A recent case of Tax payable of 49000 euros comes to mind. Surely it is a bit more than most people can save in a tax year on their UK income?Plus if you were here not earning or perhaps declaring the rent from your UK house as income,your tax payable would be very little if any?

Regards.

[Sunday Driver]

Now that the roof is finally on the barn, the simple solution is to get it partially habitable and move in.   The barn then becomes your principle residence and the rented acccommodation reverts to being your secondary residence.  At the same time, you notify your tax office of the change of address.  As the occupier, you'll pay tax d'habitation on the barn from 1 January.  All legal and above board - and no CGT liability.......

 

 

[Callie]

[quote user="Steve"]I pay taxe d'habitation.

[/quote]

Surely if you weren't living there and the house was not habitable, you shouldn't be paying taxe d'habitation?? Perhaps I am wrong ???

[Callie]

[quote user="Steve"] I pay taxe d'habitation.[/quote]

Sorry, used Safari instead of Camina....

That should have read

Surely you shouldn't be paying taxe d'habitation if the house is uninhabitable??  Perhaps I am wrong???

[BJSLIV]

Don't forget you will also have to pay VAT from the sale proceeds if you sell within five years of completion.

[woody234]

so

1 did you use french or english builders  

2  did they get recomended by a friend

3 how much have you spent on the barn

4 how long have you had the barn

5 was it a total renovation or just a lick of paint and insulate the roof

6 did you get 3 different quotes for the building work