Divorce and capital gains Tax

[Francaisblue]

I am currently in the final stages of a divorce and both my soon to be ex-wife and I own a property in France outright, which we have had for a few years.  We are both now living in England and there is the strong possibility that my ex will buy my share out and either retain the property or sell at a later stage, following further renovation.  In this instance will I be liable for French capital gains tax on the share I will receive, should she retain the property or sell it at a later date. 

[Will]

Mrs Will and her ex owned a ruin in France, which they sold fairly recently. They had to pay plus value (French CGT) on the sale, Mrs W paying the extra 11% charges on her half because she lives and works in France. In your case, as you are selling your share to your ex, you will be liable for tax on your share if a profit has been made (and depending on how long you owned it). As you live in England, then UK CGT may come into the equation as well, depending on the amount of the gain and whether you have made any other taxable gains in that year.

[Francaisblue]

Many thanks Will, I am a complete novice in this area and your advice is invaulable.  To add further that we completed purchase of the property around Mid 2003.  Am I right in asuming that tax is based on profit on purchase price less all invoiced recipts for work undertaken on the property.  Also what percentage is GCT currently and is my percentage likely to be less, because my ex, could in all possibility return to live in France in the future.

 

 

[Will]

Hello again, you really need to speak to a notaire or tax specialist to get definite answers. My own understanding is that you can indeed offset the cost of certain works on the house as long as you have valid TVA invoices from French-registered tradesmen (i.e. materials-only invoices, or non-registered artisans do not usually count). The invoices must be fully-detailed and must show both the name of the customer and the address of the house where the work was carried out.

If the house has been owned for more than five years, a standard percentage discount can be applied rather than invoices. You can also knock off the necessary legal and agency fees involved in buying and/or selling. After this, tax is charged at 16% of the profit if you are European residents (as you are), 33.3% for those from outside Europe. French residents have to pay an extra 11% in social charges, so if neither of you are French taxpayers at the time you will escape this extra amount.