dash Posted July 29, 2007 Share Posted July 29, 2007 we bought our house in Brittany just over 5 years ago and its regrettable that we now have to put it on the market for sale,what taxes will we have to pay or do you have to own a property a certain amount of years before paying any tax,can you shed any light on this.thanks Link to comment Share on other sites More sharing options...
Pickles Posted July 29, 2007 Share Posted July 29, 2007 [quote user="dash"] we bought our house in Brittany just over 5 years ago and its regrettable that we now have to put it on the market for sale,what taxes will we have to pay or do you have to own a property a certain amount of years before paying any tax,can you shed any light on this.thanks[/quote]A search on the site would have revealed the following post:Capital Gains Tax (CGT) on sales of French Property(Impot sur plus-value)Whether or not there is capital gains tax to be paidin France or elsewhere onthe sale of a property in Francedepends on several factors:French resident: The CGT position of a person whois French resident is that they have no French CGT to pay on thecapital gain realisedon the sale of their principal (habitual) residence. The mainrequirement appears to be that it is their main (habitual) residence onthe date of sale. If the sale concerns asecond home or other property (eg investment/let property), then CGT ischargeable at a rate of 16% of the gain after allowances. There willalso be aliability for 11% social charges on the gain after allowances .If you are resident in another EU member state andyou have previously been fiscally resident in France for two consecutiveyears, then the sale of a French property is free of French CGT. From2006 this ruling applies to the sale of up to two French properties providedthat the second sale is of the only residence in France of the non-resident ANDthat the second sale takes place more than 5 years after the first sale thatwas exempted from CGT.If you are non-resident in France and have not previously been fiscallyresident in France for two consecutive years, there will be French CGT (pluspossibly CGT in your country of residence) to pay on the sale of any Frenchproperty: this is charged at a rate of 16% of the gain after allowances foran EU citizen, and 33% for a non-EU citizen.To calculate the gain, you start with the saleprice net vendor and deduct the initial purchase price including purchasecosts, the value of certain types of improvement works done to the property for which youhave valid receipts and the disposal costs. In Francethere is then a form of taper relief so that for every additional year after 5years of ownership the taxable gain is reduced by 10% until after 15 years ofownership there is no CGT to pay in France. To calculate the taxliability you simply multiply the gain after allowances and taper relief by 16%.If you are UK resident and domiciled then you will also have to declare thesale to HMRC and pay CGT on the gain after allowances - in the UK taper relief startsin year 3 of ownership but reduces the taxable amount by only 5% per year untilreaching a maximum reduction of the taxable amount of 40% after year 10. Henceafter year 10 in the UKyou would pay CGT calculated on 60% of the gain after allowances. The amountchargeable to CGT is added onto the top of income liable to income tax forindividuals and is currently charged to CGT at these rates (note the deletionof the 10% starting rate band was announced in the 2007 budget):below the starting rate limit at 10%, between the starting rate and basic rate limits at 20%, and above the basic rate limit at 40%Any French capital gains tax paidcan be offset against your UKcapital gains tax liability. Note that if you purchased the property before1998, the UK calculation is more complicated.The French Fisc site(www.impots.gouv.fr) and the UKtax site www.hmrc.gov.uk should be consulted for up-to-date details. Link to comment Share on other sites More sharing options...
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