Notaire holding proceeds

[Coops]

The sale of my house in Brittany completed a week ago.I have received a fax from my notaire saying that to release the funds he must pay the CGT due,but I must first send him a current council tax notice and my most recent UK tax return.

The problem is we do not pay a tax,my husband being disabled,so no tax return.I had explained this to the notaire while seeing him in January but he seemed disinterested.

Do you think that any other form of proof of residency will do as it will take ages to get non tax payer status proof from the tax office now.I have asked the notaire this but he does't seem to understand what I'm asking.

Any advice

Kate

[Teamedup]

I don't know how the system works in the UK. I know here you would have had to do a tax declaration and it would have come back as 'O' euros being owed in tax.

Notaires are rather fond of hanging onto the proceeds from sales. In fact it can be fairly normal. My neighbours sister waited months for hers as she hadn't remembered to note that she wanted them ASAP after the sale of the property.

So as they are rather used to 'hanging' on you really are going to have to push for this to get resolved.

[goldcoaster]

Hi there - I am British but live in Australia. I own a house in the Haute Garonne region as a holiday home.I pay habitation tax and tax fonciere on the property but have never submitted a tax return in France as I have never worked over there. I bought the property in September 2002 and have carried out lots of renovation work so now the property is worth 4 times the amount I paid for it - this means a huge profit margin even allowing for the cost of the renovation works. It is my only residence in Europe and I still have a British passport. I am now looking to sell the property but do not want to have to pay 15% capital gains tax on the profit. I have heard that if you submit a French tax return to prove residency then you are not liable to pay this 'plus value' tax. Could you explain whether this is correct and if so, how do I go about getting a tax form so that I can submit it. Does anyone know when the tax year runs in France so that I can submit it before the end of this financial year if possible. If anyone has any information on the pitfalls of selling a property in France I would be grateful of your comments. I speak very little French so this is a great drawback when having to deal with anyone in authority.

 

[Will]

Unfortunately it is not just a matter of submitting a French tax return, you have to actually be resident and in the system in order to satisfy the French tax man that the house you are selling is your principal residence. Unless the notaire (who is in effect a government official, whose duty is to ensure all is legal with the transaction and all taxes due are paid) is satisfied that this is the case, then the capital gains tax will automatically be retained from the proceeds of sale.

If the work was carried out by tradesmen registered in France for TVA, and you can support this with detailed invoices showing the full nature of the work, the address of the property, and your name, then the cost can be offset against plus value. There are certain other standard allowances, as described in an article in Living France May 2005 issue. Though unfortunately the article seems to have got one thing wrong, and that is the rate of tax, which it puts at 27% - this is the rate applying to French residents selling a secondary residence. Other EU citizens pay 16%. You, living in Australia, although holding a British passport, may be deemed to be liable for the non-EU rate, which is 33%.

As you see, it can get very complicated (and even the experts get it wrong sometimes, as shown by the article mentioned above). You really need to either be prepared to pay the plus value or take professional advice. If you are correct and the house has increased in value by 400% in two and a half years then you still stand to make a tidy sum even paying tax on the profits.

[goldcoaster]

Thanks for your advice Will. Do you or anybody else out there know, or have used a good English speaking and competent French tax advisor or accountant that we could speak with and discuss our situation/scenerios with. As you say - even the experts get it wrong sometimes so we really need to talk it through with somebody who knows their way around the French tax laws.

[goldcoaster]

I have been advised that I can submit tax returns in arrears, and, as I have been paying the full habitation tax and pay my water and electricity bills by direct debit for the past 2 and a half years from my French bank account that I can be classed as resident. I have not earnt any money in France or in Uk since taking possession of the property in Sept 2002. As this is the case I have been told that I will be classed as French resident and therefore not liable to any capital gains tax. Could somebody let me know if I would still be liable for the French social tax of 9/10% and if this other information that I have been given is correct? Thanks. 

[Will]

That's interesting - if your advice is correct then almost any holiday home owner would be able to avoid capital gains tax, as they all pay local taxes, electricity, water etc. I'd say you would certainly be liable for the social charges (CSG, CRDS etc) in addition to plus value.