Capital Gains Tax

[Woodchurchzoo]

We are thinking of moving within France and have had our house almost two years now.

If we go we will be making a profit on it.

We have been told by some people that we will be liable for capital gains tax.  Why would this be if this is our main residence?

[Will]

My understanding is that if you are fiscally resident in France, which is normally determined by whether ot not you have made a tax return in France, you should not have to pay capital gains tax on your principal residence. 

So even if you have no French income, it is still worth making a tax return if you live here, if only to establish your tax position. 

[chandos]

 

Hello: I've been pondering this CGT problem for a couple of months now and I'm looking for a solution. I'm a UK national and will be selling my french property early next year, but I'm not actually registered as a French resident; because I've done a lot of travelling here and there and have never spent any real continuous time in France.

The property is my principle residence as I own no other property. I understand that avoiding CGT liability in my case rests on my proving I am a French resident. I read on another post that the determination of residency is whether or not you filed a tax return for the previous year. Is this correct, that they only look back to the previous year?

If this is so, this would be my solution. File a tax return for 2004 and sell the property in 2005 as the amount of tax I would pay on income would be far less than my potential CGT liability. Does this sound feasable?

Any help would be gratefully received.

Chandos

 

[BJSLIV]

As the tax authorities are used to this kind of ruse, I would expect them to limit your tax free allowance to a percentage based on the period the property had beenn your prime residence , ie since you started submitting returns, divided by the period of total ownership. Thats certainly what the UK authorities would do for a UK property. But of course in their case, as a Brit, if you had no other property it would be much easier to prove,  by default, that it was your prime residence, assuming that you had been paying taxes in the UK.