UK Property CGT and France

[RichardKnight]

Has anyone gone through the following scenario and hence know the answer?

We have a property in the UK which until 2 years ago was a principle residence. The UK allows 3 years after moving out to dispose of the property without any liability for capital gains tax on the profit.

We will be moving to France permanently within the next 4 months.

Suppose we kept the property for another year and sold it 4 years after having vacated it (as a principle residence). In the UK you'd still keep the valuable 3 year CGT allowance, but having kept it for 4 years would pay CGT on 25% (i.e. 1 year of the 4) any gain.

What would the French tax authorities do? Tax as per the UK scenario or tax on the entire profit, or something else?

Any experience of this situation and hence help greatly appreciated.

Richard

[Anton Redman]

> Suppose we kept the property for another year and sold it 4 years after having vacated it (as a principle residence). In the UK you'd still keep the valuable 3 year CGT allowance, but having kept it for 4 years would pay CGT on 25% (i.e. 1 year of the 4) any gain.

UK exemption for residents is, I think, far more generous than that. If you lived in the house as your PPL for 6 years and sold it after ten year in total. Only 1/10, falls into tax with ( 6 plus 3) falling outside tax. The last time I tried to read through all the background on this I thought I reached the point the Anglo French double taxation agreement put the gain under UK taxation exclusively provided you were still domiciled in the UK.

My advice on this would be to read through the KPMG book on French taxation then find an accountant who has regular dealings with both tax regimes. The downside risk from second hand advice is in this case huge compared to the cost of good advice. Other questions such as :
Have you rented it out during the four years
Did you have to move out because of your work etc.
etc. also have an impact.

The Inland Revenue web site has a number of good leaflets but it remains a complex subject

http://www.inlandrevenue.gov.uk/pdfs/2001_02/capital_gains/ir283.pdf