selling UK house

[Patf]

We have been in France for 5yrs plus and up to now have kept our UK house and it's let out to tenants. We're now thinking of selling it as costs are mounting up and now it's barely financially viable. Would we be liable for UK CGT on the profit? I've found a relevant thread (early this year) but it's not clear whether this depends on having been out of UK for less or more than 5 years. Pat.

[Gluestick]

From the change of the rule governing ex pat's taxation (1998), after Five Years have elapsed as a non-resident you will have zero CGT (Capital Gains Tax) to pay in the UK on the sale of any capital asset such as a house.

However, if you are now caught by the French Regime Fiscale, you will in all probability fall to tax in France since France like most jurisdictions taxing residents on Worldwide assets and income.

Personally, I would invest some small fees with a competent French accountant.

 

[Patf]

Thanks for clarifying that Gluestick.

[BJSLIV]

Precisely where you to look for comprehensive advice on both French and UK tax rules is always difficult.

Mind you, if you have not yet been absent from the UK for a full five years it might be better to sell quickly and be caught by the UK rules.

Why?

Depending on how long you have owned the house your gain may be less than you think.

Something like.

Total gain divided by number of years ownership , multiplied by two would be the maximum gain that would be taxable.

Less £40,000 allowance for renting out.

Divided by two, Assuming that its jointly owned, Less annual CGT allowance taxable at (probably) 22%.

On the other hand if you fall into the French system...................................

 

[Sunday Driver]

Under the current UK/France double taxation treaty, the gain arises in the country where the property is situated and, as mentioned, is subject to the five year absence exemption.

However, there is a new treaty awaiting ratification, under which the gains will also be taxable in the country where the taxpayer is resident, but with credit for the tax paid in the country where the property is situated.  So once this happens, your gain on the sale of the UK property will be taxable in France, with a credit for any UK tax paid - which in your case will be nil.

As BJ says, consider selling the UK house without delay.