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Unable to offset ANY receipts for renovations against CGT - HELP NEEDED

Liz Delaney

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we have recently (3rd January) sold our french house, and have been told that we are unable to claim for any materials which I purchased during the renovation (which friends and family undertook), and consequently cannot offset a single receipt. We owned the house for 5 years, and we are UK residents paying UK taxes. When we began the project we were advised that the cost of any work undertaken to improve the property would be able to be offset by using the materials receipts and multiplying by 3 (I think), however the french legislation has been amended and it seems now that we cannot expect to offset a single euro of the renovations to reduced the 16% CGT to paid on the difference between the original purchase price and the sale price.

I have found the notary to be difficult to deal with and she has not explained in full the revised legislation surrounding CGT. Can anyone help me to recoup any of these costs.

Grateful for any advise whatsoever


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Yes your Notaire is right; The law changed two or three years ago.

Now you can only deduct the cost of improvements invoiced by artisans registered in France.You can of course deduct any fees involved in the transaction.

As you have only owned the property for five yeras you will not benefit from the other main tax saver, which reduces the gain by ten percent for each year the property is owned from years 6 to 15.

Don't forget that you will also be liable for CGT on the gain in the UK. This will be calculated in the usual way (Gain - annual allowanaces) multiplied by your marginal tax rate less any tax paid in France. It gets a bit painful if you are paying income tax at 40%.





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The rules changed on 1st January 2004 and having been through the process can say that they a generally far better now. However, you cannot claim for materials you bought by yourself or any renovations not carried out by approved tradespeople. If you sold you home with furniture and furnishings then an allowance can be offset by the notaire against capital gains tax liability. Also be aware that you can may also have a liability for UK capital gains tax as well French tax as per double taxation rules. The other point was if you had completed the sale on or before 31 December 2005 you would not be liable for the 2006 Taxe d'Habitation but hopefully the sale agreement would have allowed for Tax Foncière 2006 to be apportioned between yourself and the new owners. 


PS I am sorry that some of the comments are the same as BJSLIV but we must have written at the same time.

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[quote user="Beaufort"]I was under the impression that current regulations meant that if you paid the CGT in France then you shouldn't be expected to pay the UK CGT. Something to do with the Dual Tax Treaties.

Sorry to disappoint you, but you are certainly potentially liable for UK Capital Gains tax however they will allow any payments made in France as well as all the UK capital gain allowances. It is essential that all the Notaires tax calculations and allowances are in writing with a note of the applicable rate of exchange on the day of the sale for submission to  UK Inland Revenue when completing 20005/06 Capital Gains return, they will then determine whether you are liable for any further payments.

Dual Taxation agreements basically allow for payments made in one country to be offset against payments due in another country.


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We sold our house in France October just gone. It was purchased in 89 and had been our secondary residence up until we left UK about two and a half years ago. The notaire calculated that we didn't owe any CGT due to the fact that we had owned the property since 89 but told us to hang on to any bills that would show proof of residency for the period stated.

Will I fall under the new UK tax rules for CGT for this sale?

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"Will I fall under the new UK tax rules for CGT for this sale?"

The new CGT rules apply only to France not the UK.

As you had owned your French property for over 15 years there is no CGT payable in France but the under normal circumstance there could still be a liability in the UK. However, you state that you left the UK  over 2 years ago and assuming your French property became your main residence then there is no liabilty for CGT in either country.


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There are two ‘must read’ documents available (both in French) and they are as follows:


Direction Générale des Impôts – art. 244 bis A du C.G.I




Conseils Par Des Notaires – Janvier 2004 – No 323


The tax rates for non SCI’s are as follows:


1.      33.33% for the residents except European Union

2.      16 % for the European residents

3.      26.3 % since July 1, 2004 for the French residents


The tax rates for SCI’s are as follows:


1.      16% + 10.3 % for the physical residents people French.

2.      16% for the physical residents people Europeans or not European.

3.      33.33% if the SCI is controlled by a French SCI.

4.      IS for a legal entity domiciled in France (declaration 2065).

5.      33.33% for a legal entity foreigner (declaration 2090 (a) and designation of a tax representative) (discussed solution).


The bit that concerns this person is, and I quote, are as follows.


Deductible work


  • Only the building work is deductible, rebuilding, enlarging and improvement, have the exclusion of all them others: a new element must be brings beyond the replacement or of restoration.

  • even of heavy repairs such as the repair of roof, or the replacement of a decayed heating system, or them handing-over to the standards, cannot be taken any more into account.

  • However concepts of in dissociable work of deductible work in the event of batch and non-batch jobs.


Hope this clears up any misunderstandings.


I shall post the main document in the FAQ Section

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