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Capital gains in France


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Looking at selling one of our rental properties in Australia. We will have made a nice profit on it, but are wondering how much of this nice profit the French government is going to demand. There is a double taxation agreement between Oz and France, but not on captial gains for some strange reason. After paying the tax in Australia, we are wondering what the rate of tax to be paid on it in France would be. And of course there's also the social security who will no doubt want their pound of flesh. Anyone have any dealings like this in the past who could shed some light?

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[quote user="LyndaandRichard"]Looking at selling one of our rental properties in Australia. We will have made a nice profit on it, but are wondering how much of this nice profit the French government is going to demand. There is a double taxation agreement between Oz and France, but not on captial gains for some strange reason. After paying the tax in Australia, we are wondering what the rate of tax to be paid on it in France would be. And of course there's also the social security who will no doubt want their pound of flesh. Anyone have any dealings like this in the past who could shed some light?
[/quote]

You would pay a proportion (27% - 16% CGT + 11% social - abated by the number of years you have owned it, just like a French gain), based on the profit less the CGT already paid. In the UK, (& I guess Oz?) there are no rebates for long-term ownership.

Assuming you are tax recident in France when you sell the property. If not, then there would be nothing to pay...

Ask an accountant! (In France!).

 

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[quote user="Nick Trollope"] In the UK, there are no rebates for long-term ownership.[/quote]

It's not pertinent to the Oz situation, but sorry Nick, but I think you may be misinformed about the UK situation. In the UK a form of taper relief starts

in year 3 of ownership, reducing the taxable gain by 5% per year until

reaching a maximum reduction of the taxable amount of 40% after year 10 (ie the taxable part of the gain reduces to 60% of the gain in year 10).

Regards

Pickles

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[quote user="LyndaandRichard"]Either way, governments are greedy b*******s! Especially to tax you twice for the same thing.

If I sell it, and have to pay all those taxes, I'll just go on the dole and try and get as much of my money back again the following year. Grrr.

[/quote]

Ah, but then you'd find that your dole payments are reduced because you have capital, and the rate at which they reduce the dole payment requires you to burn through your capital - either that or else they are assuming that you can get in excess of 10% return net of tax ....(just done the figures for a neighbour)

Regards

Pickles

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hi

if you have declared it on your french tax form and you have to sell it, it sounds as if you will be stung for tax.  Before becoming french resident you should have considered all the issues with regard to your real estate assets.    I would think there is a legal way to avoid such punative taxes, spend money to obtain professional advice.

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[quote user="bigears"]

hi

if you have declared it on your french tax form and you have to sell it, it sounds as if you will be stung for tax.  Before becoming french resident you should have considered all the issues with regard to your real estate assets.    I would think there is a legal way to avoid such punative taxes, spend money to obtain professional advice.

[/quote]

Well hindsight is such a great thing isn't it.

I've taken it off the market, and it won't be a train smash in the future. We'll just move back to Oz for 6 months, have an extended holiday, sell it while we're there and only pay the lower CGT in Australia. The money we'd save would easily provide for us.

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You MUST take specialist advice on this - which will be difficult but not impossible to find. Double taxation treaties are a minefield and only a serious expert will be able to advice you.

For example until recently (the new double taxation treaty comes in around now) the UK France double taxation arrangment had a loophole where if you acquired a house while tax resident in the UK and then moved to France and sold it, capital gains was not chargable in either country - as i said this loophole has now been closed, but the wider point is that there may be something similar in the France Australia agreement - or the situation may be completley different - moving back for 1 tax year may (or may not be) suffcient - do not take advice on this even from an ordinary french accountant as your situation is unusual.

I would suggest you get in touch with the Australian embassy or any expat orginisation who can put you in touch with an expert with specific knowlege of the Aus/France double tax treaty. A few hundred euros on getting chapter and verse could well be the bargain of lifetime compared with thinking you have avoided liability and then turning out to be wrong.

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[quote user="freddy"]

For example until recently (the new double taxation treaty comes in around now) the UK France double taxation arrangment had a loophole where if you acquired a house while tax resident in the UK and then moved to France and sold it, capital gains was not chargable in either country - as i said this loophole has now been closed, [/quote]

I'm pretty sure that this particular loophole still exists.  The UK/France treaty, although signed in 2004 has not yet come into force, see  http://www.hmrc.gov.uk/international/france.pdf

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