When does a maison secondaire become a maison secondaire

[Mr Coeur de Lion]

Ok, many of you may know my situation.

Bought a house in France with my wife about 5 years ago and spent a fair bit doing it up.

We split up and I am now in the States studying for two years.

In the meantime, I have rented this house out to give me a small income while studying. It's been rented for about 8 months now out of the 5.5 years of ownership.

I'm considering selling it this year.

Is it a maison secondaire or not because it is still my only house? I would assume, if it is, I would only have to pay CGT on the years it has been rented out, because before it was a primary residence?

Also, is the CGT calculated on the entire value of the property, or just the gains? I paid €68k for it (plus €6k for notaires and agents fees), and it's been valued at around €90k now. I would imagine the gains would therefore be only €16k? I know I've put more money than €16k in as well :(

Anyone shed any light on this?

[tinabee]

I'm sure I read somewhere that once you have rented out your property it can no longer be classed as a principal residence. Unfortunately I can't find the reference at the moment - maybe someone will be along soon who knows for certain.

Additional info here

http://www.french-property.com/guides/france/finance-taxation/taxation/capital-gains-tax/

Also, depending on the type of letting, your tenant may have first refusal on buying the property.

[Sunday Driver]

From a CGT prespective, a property is considered to be your principal residence if you are living in it as at the date of sale.  However, the impots recognise that people may buy a new property and move into it before the old one is sold, so they currently allow you two year's grace before your old house no longer qualifies as a principal residence, but on condition that the property is not let out to anyone or allowed to be occupied free of charge by relatives or others.

If you are an EU citizen who is resident abroad, then your French property is not subject to CGT on the double condition that you have been tax resident in France for at least two consecutive years at any time in the past, and that the property has been unoccupied and available for sale from at least the 1st January of the year preceding the sale.

If CGT does apply, then it calculated on the difference between the sale price (plus eligible expenses) and the purchase price (plus eligible expenses).  There is also 10% per annum taper relief which applies from the sixth year of ownership onwards.

 

[parsnips]

Hi,

    If you are an EU citizen there is a special exemption from CGT on the sale of any house in France (principal or secondaire) on condition that the vendor has been french fiscal resident for at least 2 years at any time in the past, and have had full use of the house (ie not let) from the 1st.January of the year preceding the year of sale.

     As it appears you miss out on this, then the notaire will charge CGT on the gains less allowable expenses.

     If you have invoices from tradesmen for work done these will be deductible from the gains--if you don't have any and you have owned the house at least 5 years , there is a flat rate 15% allowance for work done. There is also a 1000€ deduction for all sales.Expenses incurred in the purchase are allowable, and some incurred in the sale , (your notaire will advise on this).

    

[Mr Coeur de Lion]

Many thanks.

I am actually relieved because my understanding was that the CGT was taxed on the entire value. Some misinformation there.

So it's just the €16k that would be subject to CGY. That will be easy to lose, as my plumbing cost about €10k and I think the fireplace cost around €6k. I have receipts for both, so that would mean no CGT to worry about.

Only that I've lost a lot of money on my house (as I put in a lot more than it's worth).