Tax on House sale Capital Gain

[Alexjardin]

A word of warning.

Friends of ours have been informed officially by their notaire that only the factures of French SIRET-holders will now be accepted as expenses when calculating the capital gains tax liability on sale of anyone who has not been resident for 5 years.

The principle of taking the cost of materials bought in France, and adding a percentage (like 2.5 x) for self-supplied labour, will no longer be permitted. This, of course, will make a huge difference to all those people who have genuinely "done-it-themselves" to improve their property, to the detriment of their ability to move on.

We understand this change was due to the number of British so-called developers who were milking the system by making excess profits on sales and, in the eyes of the authorities, getting away with it. There you are, then, all good things come to an end - but unfortunately it's the innocent individual who ends up getting caught as well!

[Mazan]

>Friends of ours have been informed
>officially by their notaire that
>only the factures of French
>SIRET-holders will now be accepted
>as expenses when calculating the
>capital gains tax liability on
>sale of anyone who has
>not been resident for 5
>years.

It would not be legal to exclude bills from companies in other EU countries merely because they are not French.

[Punch]

>Friends of ours have been informed
>officially by their notaire that
>only the factures of French
>SIRET-holders will now be accepted
>as expenses when calculating the
>capital gains tax liability on
>sale of anyone who has
>not been resident for 5
>years.

Great news! It will help stop the greedy ones buying, bodging up and selling on for a huge profit.

>The principle of taking the cost
>of materials bought in France,
>and adding a percentage (like
>2.5 x) for self-supplied labour,
>will no longer be permitted.
> This, of course, will
>make a huge difference to
>all those people who have
>genuinely "done-it-themselves" to improve their
>property, to the detriment of
>their ability to move on.

This should now be a calculated item in the purchase thought process.


This is great news to all bona fide registered businesses here in France. It will also help us to be more competitive against the unregistered workers who can always undercut us as they don't have the same charges to pay.

>It would not be legal to exclude bills from companies in other >EU countries merely because they are not French.

Nothing new here. France has always ignored EU rules to suit itself. I personally think that France has got it right in the way the construction industry workers are regulated, ie; individual registration.
In the UK, Pat the postman could become Bob the builder at the weekend if he wanted to quite legally, this is not the case here. In over twenty years of running a UK business, I was never once asked by a customer to prove my qualifications.In two years registered here I'm been asked for details all the time.

Paul

[MCline57]

Boy is this a timely question. We are planning to sell the place we bought in Sete last September and buy a place in the country. Since our place here is our primary residence, does anyone know if we are bound by the five year holding period before there are no French capital gains or is there a provision which allows one to avoid tax on the gain, in whole or part, if one sells one's primary residence and buys another primary residence?

Michal

[MCline57]

Well we went to the Notaire and he said that if a place is your primary residence, then one must only keep the house for 2 years. There is no minimum if you must move because of a job.
For some reason, I do not feel absolutely confident with this answer and will try to do some research into the French tax laws.

Michal

[clairea]

Hi and Happy New Year to everyone out there.

Could someone please give me some advice on a slightly different element regarding Capital Gains tax on the sale of accommodation. I need to find out what the tax liability would be on any profit made on a property which is a secondary residence (owner is resident in the UK) and which has been in their possession for approx 25 years.

Thank you to anyone who can help me on this.

[ASOfford]

Sincere apologies for not replying sooner to your query re registering Office in France; Snowed under with work!

Anyway. Assuming that you are already a Limited UK Company - Take the following documentation to the Chambre de Commerce.

Memorandum of Association (In French)
Certificate of Incorporation (Not in French)
Confirmation that you are the Director/s
Confirmation from your Landlord or the owner of your property (This can be a letter from you to you if you intend to work from home!) that you have permission to run a business from the proposed Office Address.
Proof of domicile in France (EDF/France Telecom Bill/Lease)

Proof of French Bank Account (Not always necessary)
VAT Certificate
(you will still be registered for TVA in France whether you like it or not unless you can definatively prove that all work & invoicing is carried out from the UK)

Chequebook to pay for the following fees: Registration Charge for La Greffe (Tribunal) to issue you with a Certificate plus Reg No Like Companies House (Normally 54 but this may change per Department -I don't know)

Membership Fee for Chambre de Commerce (Obligatory plus invaluable - Doors open magically after this is handed over!!)
Fees for other Chambres eg> Chambre de Metiers if this applies to you - and you will be advised.
Ask Chamber of Commerce to assist you filling out Forms.

If you are already a UK Company you will NOT HAVE to place Capital in a Secure Account.

Hope all this info helps and once again sincere apologies for taking so long to reply.

Sally O

[Liz Delaney]

Hi

I have recently experienced the same problem, and have been told that I am unable to claim for any materials which I purchased during the renovation, and consequently cannot offset a single receipt. Do you know if this is now the french law? I have found the notary to be difficult to deal with and she has not explained in full the revised legislation surrounding CGT.

Grateful for any advise

Liz

[adrianpmills]

Your notaire is wrong - the two year rule is the old definition.   As long as you can prove the house is your primary residence on the day of sale then you not be liable for CGT.  You could have owned it for only a few months.

[adrianpmills]

To Claire's question - there is no CGT liability on a secondary residence owned for more than fifteen years.

[Baz]

[quote user="adrianpmills"]Your notaire is wrong - the two year rule is the old definition.   As long as you can prove the house is your primary residence on the day of sale then you not be liable for CGT.  You could have owned it for only a few months.[/quote]

Adrian, to prevent any confusion you appear to be  responding to a post dated 22 May 2002  and the new rules were introduced 1st January 2004, so I think the Notaire was not wrong.

Baz

 

[adrianpmills]

Quite right Baz - I hadn't spotted the resurrection.

[d murrill]

Just checking the cgt mine field is becoming very confusing. As so many including notaires infomation differs.Does this enclude a property that was once a 2nd home now principal residence.[*-)]

[Quillan]

There are two ‘must read’ documents available (both in French) and they are as follows:

 Direction Générale des Impôts – art. 244 bis A du C.G.I

 And

 Conseils Par Des Notaires – Janvier 2004 – No 323

If you have owned the house for under 15 years you will have to pay this tax it's just that the percentage changes depending on your residencial situation and how many years you have owned the house.

The first of the above documents lays out the percentage rates and who pays them. I also tells you what you can and cannot claim back. You can read this, in English and French in our FAQ section and here is a dirct link.:

http://www.completefrance.com/cs/forums/605411/ShowPost.aspx

The second document which I have not copied and posted, which is again in French, is the document sent to notaires explaining how these rule should be physically applied. It's interesting to see that they are trying to put people off using a SCI to buy their house by adding another 10% just for them if they come from a EU member state and are resident in France.

I'm no expert in this at all but just happened to be given a copyof these documents one of which I have scanned in and translated.

Hope this helps.

[Will]

If you get the current (New Year 2006) issue of Living France magazine, you will find an article (pages 63-64) explaining the current French capital gains tax situation. It is, of course, in English [:)]

[daniel]

If I understand this text, CGT is 16% for non-french E.U. people and 26% for french people.

I have to admit the fact that I was born on the wrong side of the channel.

Je le savais depuis le début, Put*** de Bor*** de Mer**.

[Will]

16% is the basic rate of plus value that is paid by all EU citizens. French taxpayers (of whatever nationality) pay an extra 11% in social charges (CSG, CRDS etc) making 27%. It actually went up very slightly a year ago. Non-EU citizens will pay 33.3%. Do get hold of the latest issue of Living France, because it is a very complicated subject.

[Quillan]

Before anybody who lives here gets worried this is only on a holiday or second property. There is no tax to be paid if it is your main place of residency.

[Will]

Quite correct, 'main place of residency' is determined, basically, by whether or not you have made tax returns, in France, as a French resident at that address, in the period leading up to the sale. Again it can get complicated, so if you are a borderline case, or if the house, or part of it, is used as a business, do seek qualified advice.