Tax and Property (Residence and Selling)

[mellybelly]

Hi all found this on a "french information" site for Brits.

Is this information still correct ?

"As with a property in the UK, if you sell a property in France for more than you paid for it you are potentially liable for tax on the capital gain.

The gain is calculated by deducting the purchase price (plus eligible expenses) from the sale price (plus eligible expenses). Purchase expenses can either be claimed specifically with supporting documentary evidence or a fixed 7.5% of the purchase price is allowed without such evidence.

Subsequent costs associated with construction, enlargement or improvement of the property can also be deducted from the gain. To claim these costs specifically you will need to be able to produce invoices to support the expenditure, and normally these will need to be from French registered builders. Otherwise, if you have owned the property for over 5 years you are allowed to deduct a fixed 15% from the purchase price without providing such evidence.

Eligible expenses for the sale include estate agents fees.

There are however a number of capital gains tax exemptions, the most important of which are the ‘principal residence’ exemption and the ‘thirty year rule’.

If you have been permanently resident in France and you are selling your principal home then any capital gain is fully exempt from capital gains tax.

In order to qualify the property must have been occupied by you on a habitual basis, although you need not actually be occupying it at the time of sale. However, if you leave the property before it is sold you are not permitted to let out the property during the intervening period, or to leave other family members in occupation. The French tax authority will also expect you to have made an income tax declaration from the property address and paid the “taxe d’habitation”.

If the property is not your principal residence you can take advantage of the ‘thirty year rule’. Under this rule you benefit from ‘taper relief’ phased progressively over thirty years of ownership. The formula works on the basis of:

Ownership from 6 to 17 years reduction of 2% per annum of the gain

Ownership from 18 to 24 years reduction of 4% per annum of the gain

Ownership from 25 to 30 years reduction of 8% per annum of the gain

So, if a property is sold after thirty years of ownership then total relief is obtained, that is (12 x 2% ) + (7 x 4%) + (6 x 8%) = 100%.

Sorry about the length of it !!

Thanks Mel.

[NormanH]

There is no mention of the exoneration for people on a pension and under a certain income, that used to exist before the 15 years was changed to 30.

I don't know if it still exists, but was extensively discussed on this Forum.