C.G.Tax payable on new house sale?

[Gastines]

As we all seem to be having letters from our dear friends in the I.R. and some members seem to be fairly knowledgeable on the subject, perhaps someone can help with a query on French C.G.T.

If we have a new house built on a spare plot of land here,purely to sell when completed,what is the amount of C.G.T payable? I have been told 16% and 26%.

Presumably payable on net profit? Is there any gain by not selling for a few years?

Referring to the letters dished out from the I.R. it also works the other way, we have been trying to get a rebate on tax paid for over 2 1/2 years.They,along with the N.Ins staff seem to run the most disjointed operation it is possible to create.

Regards.Nr.St.Malo.

[BJSLIV]

Assuming that you are living in France and hence part of the French system, the charge would be 16% tax  plus 11% social charges (recently increased from 10%, hence the 16% and 26% you mentioned).

You would also be liable to a charge of 19.6% TVA on the sale price, less any TVA paid during construction.

If you are still resident in the UK you would pay the TVA, and UK CGT at either 22 or 40%  less any CGT paid in France, but you wouldn't have to pay the soacila charges.

[Gastines]

Thanks for that.What does it pay to do, to make a profit these days.?

[Baz]

[quote]Thanks for that.What does it pay to do, to make a profit these days.?[/quote]

Like any type of business incuding property devlopment one of course would expect to pay tax in any country. Even taking the highest UK rate of 40% there is still 60% left and that is profit.

Baz

[Athene]

[quote]Assuming that you are living in France and hence part of the French system, the charge would be 16% tax plus 11% social charges (recently increased from 10%, hence the 16% and 26% you mentioned). Y...[/quote]

Does anyone know:

How long do you need to have your French house as your principal residence before you can sell it and escape CGT?

If you have transferred your National Health entitlement to France, can you easily transfer it back to England when you move back?

Thanks all!

 

[Will]

Does anyone know:

How long do you need to have your French house as your principal residence before you can sell it and escape CGT?

15 years

If you have transferred your National Health entitlement to France, can you easily transfer it back to England when you move back?

Sorry, don't understand the question. As far as Britain and France are concerned you join the health system in the country in which you reside, you don't transfer or build up entitlement over a period.

[BJSLIV]

Will

 I thought that if you are resident, tax paying etc, then your principal residence was immediately free of CGT for the period that it actually is your principal residence. Doesn't the 15 year business apply only to second homes?

As far as  NHS entitlement  is concerned then as soon as permanent residence in the UK resumes then "membership" also resumes.

[Val_2]

If you are resident in France and submit a yearly tax return here,then your principal residence does not incurr any CGT should you wish to sell it. However, for those second home in France owners who reside elsewhere either in France or the UK,then the usual 15 year(reduced a couple of years ago from 22 years) ownership applies where the CGT is charged on any profit etc on a sliding scale which used to begin with 33.3% during the first few years. If you cannot prove that your french property is your main residence through no filed tax returns or you are still declaring in the UK, then that may change the situation somewhat to come under "holiday home".

[Val_2]

I forgot to mention that a friend of mine who bought a permanent home here has just been to seek notarial advice about paying tax on selling up. She and her husband bought here for the second time,three years ago now and last year he died suddenly,they had not gotten round to making any sort of will etc. The upshot was that she has just paid inheritance tax on his savings and part of the house value (over £150K equivalent here) and that was 22000€. Now she is allowed to sell her 50% share in the property and not pay any CGT but her daughter who lives in the UK will be subject to 12.5% CGT on her part when they do decide to sell together.

[Will]

Yes, you are quite right - if you are genuinely fiscally resident in France then principal residences are free of plus value.

As Val mentions, you have to be careful about inheritance tax too.

[Athene]

[quote]Will I thought that if you are resident, tax paying etc, then your principal residence was immediately free of CGT for the period that it actually is your principal residence. Doesn't the 15 year bu...[/quote]

The question arises as we have a house in France which is at the moment , a 'maison secondaire' ,and we also have bought some designated building land. We bought this initially as we did not want anyone building on our borders. Soon we intend to retire to France but are undecided whether a smaller new house would be better for us in the longer term. If we did build this house, it would mean we have to sell the present French house to finance it and live in a caravan or some such whilst it was being built. So my question is related to whether we could move to France in retirement, change the tax implications etc and immediately sell the house we have escaping CGT or do we have to live there for a specifed number of years before we do this?

My other question relates to whether if we tried the life in France and it did not live up to our expectations, whether we could change our National Health contributions back again to the UK? It is so difficult to know how you would feel resident in France all the time. We love our long holidays in France but listen to what others who have come here say about what they miss about the UK and maybe we would be the same! It has to be seen! So I am hedging my bets!

I was just thinking around the options and thanks you so much all of you who have written here!

[Teamedup]

Getting back into the National Health in the UK is easy. The french authorities could give you the appropriate E form or I suspect that you could just move back and register with a doctor and would be covered again without doing anything at all. If in doubt contact Newcastle.

Sounds like your current house would be liable to CGT.

[Teamedup]

Athene, just another thought, did you mean National Health Contributions as in your pension. If that was the case then depending on how you pay  now, you could well be able to continue making voluntary contributions whilst you are in France. Newcastle overseas contributions people are the ones to contact, all their details are on the web. If you return to the UK then you would have to contact them again and see how you should be paying then.

[Gastines]

If you are unfortunate enough to have to contact Newcastle, allow 2+ years to get any sense out of them.By that time your French Main house should be exempt from CGT. They are about the most unhelpful and slow bunch it has ever been my misfortune to deal with.Average 2 months to send you a form and then when you don't hear anything they usually say,"I'll send you a form".Add on dealing with the Inland Revenue and registering with a Psychiatrist may be your main priority.

Bonne Chance.

Nr.St.Malo.

[Will]

[quote]If you are unfortunate enough to have to contact Newcastle, allow 2+ years to get any sense out of them.By that time your French Main house should be exempt from CGT. They are about the most unhelpful...[/quote]

You will find staff of DWP and UK Inland Revenue can be very helpful if you treat them like the normal human beings that they are. The way some people talk to them it is hardly surprising that they may not feel all that anxious to assist sometimes.

Sorry, but being married to a former tax person this is a sensitive subject

Athene - in your case you will probably have to have lived in France for long enough to become part of the tax system, and to have submitted (and have processed) a French tax return. This effectively takes between one and two years depending on when you move. If you sell off part of a property, and sell the rest later, as you may be doing, there will probably be capital gains tax payable on at least one of the sales, but you would have to take professional advice on this. You may actually do better financially selling before you become resident, as you would be subject to tax at 16% of the profits rather than 27%, to include social taxes, which French residents have to pay.

You should, as TU says, have no difficulty with rejoining the British NHS. The problems only arise when former UK residents return, while still resident elsewhere, and expect free treatment. If you are actually moving back then you will be OK.

[Athene]

Thanks you all very much for the really valuable advice! What a great site this is!

All this talk of selling my house is fine in principal but we have shed blood, sweat and tears getting it to where it is now. I really love it and I wonder whether I could live happily next door in a perfect 'pavilion' with my beautiful, old house next door! I am sure some of you will understand this!

We would not have two sales as we would have to sell our existing house to finance the new build, so I suspect that CGT will not come into things. At any rate, I have two years to get the house plans in and then make my mind up.

[Teamedup]

Gastines, I 'm sorry you have found Newcastle unhelpful. I've been dealing with them for donkey's years and had my first altracation with them last spring time. All got sorted though and my forms didn't take that long to get here either.