How to buy as an un-married UK tax resident..?

[joidevie]

Hello

I'm looking for some advice on buying my residence secondaire. I am a UK tax resident in my mid 40's. I am currently in a relationship (non-married) but will effectively be buying & financing the property myself. I have no children but some direct family.

Ideally I would like to to maximise my tax/inheritence position for the future, perhaps mirroring any will I may make in the UK. I own a property in the UK as well.

I have read somewhere that I could simply have something drawn up at the time of buying effectively stating that I would like to be treated as per a UK will - is this correct? I may be signing a compromis in a week or so, so will want to make a decision soon especially If I would need to buy in some other way than in my name..

There may be a chance that in my older age I may spend more time in France, possibly breaking into the 180 days+ bracket, but this seems like quite far in the future at the moment.

How easy might it be in 10 years time to divide the property 50/50 with a partner/marriage arrangement as and when circumstances change?

Many thanks for any suggestions.

[Pickles]

[quote user="joidevie"]I have read somewhere that I could simply have something drawn up at the time of buying effectively stating that I would like to be treated as per a UK will - is this correct?[/quote]

I will preface my remarks by saying that I am only able to give you an indication of the sorts of issues involved: to take this further you really need competent professional advice. You can opt to use the Hague Convention to get UK matrimonial property law to apply. The TAX law applicable to any French assets would be French, so for example if you chose to leave the part of your assets that is freely disposable (italics indicates edited bit - see below) to an indirect relative, then a large amount of tax would be payable by the estate.

[quote user="joidevie"]I may be signing a compromis in a week or so, so will want to make a decision soon especially If I would need to buy in some other way than in my name.[/quote]

I really think that you need to fully explore the options and implications with the aid of competent help BEFORE you sign up.

[quote user="joidevie"]How easy might it be in 10 years time to divide the property 50/50 with a partner/marriage arrangement as and when circumstances change? [/quote]

Adoption of an appropriate French marriage regime may be able to resolve a future change in circumstances, but this then brings its own implications - eg who dies first? What happens if the marriage/PACS breaks up?

(Edited to remove misleading info about the Hague Convention following better info from Parsnips)

Regards

Pickles

[parsnips]

[quote user="joidevie"]Hello

I'm looking for some advice on buying my residence secondaire. I am a UK tax resident in my mid 40's. I am currently in a relationship (non-married) but will effectively be buying & financing the property myself. I have no children but some direct family.

Ideally I would like to to maximise my tax/inheritence position for the future, perhaps mirroring any will I may make in the UK. I own a property in the UK as well.

I have read somewhere that I could simply have something drawn up at the time of buying effectively stating that I would like to be treated as per a UK will - is this correct? I may be signing a compromis in a week or so, so will want to make a decision soon especially If I would need to buy in some other way than in my name..

There may be a chance that in my older age I may spend more time in France, possibly breaking into the 180 days+ bracket, but this seems like quite far in the future at the moment.

How easy might it be in 10 years time to divide the property 50/50 with a partner/marriage arrangement as and when circumstances change?

Many thanks for any suggestions.

[/quote]

Hi,

    Your french house will pass under french succession rules if you die while owning it, regardless of your country of residence.  If you are happy for your direct family to inherit in the shares laid down by french law , you need do nothing as long as you stay single. On your death your family can contact a notaire who will divide your french estate (the house) among your relatives as the law dictates.

 If you would like to favour some relatives over others , speak to the notaire about drafting a simple french will to effect your wishes ,at the time of purchase.

[Will]

You are in a reasonably straightforward position. You will often read here that buying a French house as an unmarried person is a bad idea - but that is only if you are in what used to be known as a 'common law' relationship.

If you die with no spouse of children then under French inheritance laws other 'reserved heirs' - i.e. close family - will have a claim on at least part of the house. Under those circumstances then the rest of the estate can be disposed of according to your wishes. As to which relations, what proportion etc, we are now getting into complex legal areas outside the scope of this forum.

The basic facts are that you have to comply with French inheritance law as far as any fixed property (houses, land etc) is concerned if you are non-resident; if you are resident then French law applies to all of your estate. Sensible financial planning can reduce any adverse aspects of this (and there can be plenty) - again, we are getting into areas where specialist advice is needed. So a French will is necessary; this must reflect French law, in so far as you cannot totally disinherit reserved heirs. If you have only a UK will this may be taken into account when disposing of your estate - but only if it does not go against French law.

As far as residence goes, the 180 days is a bit of a red herring in France (as it can be in UK too). We are getting into potentially complex areas again, in so far as France has plenty of other fiscal residence qualifications that are applied before any 180 day rule, and that in France, residence and domicile are mostly synonymous, whereas in UK taxation there are clear distinctions between domicile (on which inheritance taxation etc is mostly based) and residence.

Should you marry, then how your property is treated depends on your marriage regime (which in turn can depend on where you marry) as defined by the Hague convention. You just have to make sure that your chosen regime reflects your wishes on shared ownership or otherwise for your French house in order for it to automatically pass to your spouse (or not).

So although I haven't really answered your questions, I see no reason why you should not sign a compromis de vente to buy the house in your own name. But do take legal advice before the final Acte de Vente, and again should you decide to marry and/or make a will. I would recommend in your case that you do not rely solely on a French notaire but consult an adviser who understands both French and UK law and inheritance taxation.

Edit - Parsnips and Pickles posted while I was looking things up. I think we broadly agree, particularly on the wisdom of getting specialised advice.

[joidevie]

Some great pointers, many thanks. And I appreciate the "take independent advice" recommendations..

So, in practice, I'm going to be subject to French succession law if resident, and French inheritance tax regardless. If I want to make a will in France whilst still UK resident for the disposal of French assets (the house) - can I do this to say something like "to be divided 50/50 between my partner and my other family" and later change this as and when I choose and circumstances/desires change? And deal with the potential later issues regarding French residency should that arise? (eg. taking advice on 'gifting, marrying etc.' in plenty of time to take advantage of age issues etc.).

It's all seems quite far in the future, but I would like to have some influence on who gets what for the foreseeable future..

Many thanks..

[parsnips]

[quote user="joidevie"]Some great pointers, many thanks. And I appreciate the "take independent advice" recommendations..

So, in practice, I'm going to be subject to French succession law if resident, and French inheritance tax regardless. If I want to make a will in France whilst still UK resident for the disposal of French assets (the house) - can I do this to say something like "to be divided 50/50 between my partner and my other family" and later change this as and when I choose and circumstances/desires change? And deal with the potential later issues regarding French residency should that arise? (eg. taking advice on 'gifting, marrying etc.' in plenty of time to take advantage of age issues etc.).

It's all seems quite far in the future, but I would like to have some influence on who gets what for the foreseeable future..

Many thanks..

[/quote]

Hi,

       With reference to your remark "50/50 between my partner....." , you should be aware that an unmarried partner would pay 60%  tax on any inheritance from you. It might be best to leave to the nearest relatives (who have the best tax allowances) and leave a  "letter of intent"  as to how they split with your partner, provided they are all UK resident. A better solution is to marry or enter into a PACS(french civil partnership).

      Again, discuss your options with the notaire.    

[joidevie]

So, in the meantime, I could buy the house in my name, and make a will asking for it to be left either entirely to my current partner or entirely to my family? Or to be left with my family with instructions for them to hand it to my partner? (saving the 60% - which is 60% of half the estate, or have I got that wrong). I have a good relationship with my notaire, but I'm currently in the UK and want to do plenty of independent research..

And then possibly 'marry' my partner in France later on as things progress?

Many thanks again..