V.A.T

[vmax]

We are in the process of selling our property and have been told that the outbuildings which we converted to Gites are liable to VAT, luckily we kept all the factures and have passed these on to our notair along with the permission etc, we found it difficult to get much information on how this works for instance how do they establish the value on the gites and is the tax on materials, labour, total value or profit etc? any information would be much appreciated

[BJSLIV]

Broadly speaking they will apportion  the sale proceeds between the house and the gites.

The sale value of the gites will be take as including VAT at19.6%. So if they were valued at say 119600 euros you would have to pay 19600 Euros VAT from the sale proceeds.

The VAT will be reduced by the VAT you paid on any work done by artisans. So the notaire will go through the bills you received when the work was done and reduce your liability accordingly. Receipts for goods and materials you purchased yourselves will not count.

On the other hand you could delay the sale until the gites are five years old......

[londoneye]

When would the gites be 5 years old do you know, from the date of the construction permit being put in, or more logically from date of notification of completion?   Seems a really stupid question i know, but we may be in similar situation, and ours will take two years to complete, so  it could be quite important for us.

[BJSLIV]

The five years runs from the date of the Declaration D'Achevement (Completion)

[Ron Avery]

I think you will find that you will have to pay Capital gains tax in France on this sort of sale also.  A friend sold a barn and lake which was part of her property, through a Notaire and had to pay CGT on the sale.

[BJSLIV]

Very true Ron! Unless you are very lucky  the sale of the gites or barns can be excluded from the "main residence" exemption from Capital Gains Tax.