Buying our next house

[Fleur]

I wasn't sure quite where to post this, but here goes.

We own a house here in France. We live here fulltime, pay all taxes here etc and this is our only property.

We are thinking of buying our next house, one that will be a little easier for us, at our age, to manage, garden and slope-wise.

If we do buy another house now before selling this one, what sort of pickle tax-wise etc can we expect to get ourselves into.

Should we:-

• Not bother buying before we sell
• Buy to rent until we sell
• Own two houses, one for living in and one for renting out as a bit of an income

Any friendly advice would be most appreciated.

Thanks

 

 

 

 

[Pickles]

IIRC, if you are living in the house at the time that you sell it, then its sale will be free of tax sur plus-value (ie CGT). No tax pickle.

Regards

Pickles

[NormanH]

Could you face renting for a period? For yourselves I mean after you have sold.

Then spend time finding the right place. You can put your things into storage.

It would avoid any problems with  tax,  ( you don't have to pay on the sale of the place you are living in, but once you have a 'résidence secondaire' you become liable for capital gains tax if it increases in value, and you have the two property taxes to pay) and in the current situation where houses are very slow and prices are falling it might help to avoid worry to know that you have sold and are in a strong position to buy.

Renting out to other people is fraught with problems in France. You have to pay tax and social security contributions on the income, and there is the winter period when you can't get people out even if they don't pay. I am sure you can find a separate thread on here about that.

[ams]

Selling will be the most difficult part of your plan. So imo sell your house first and then take your time in finding another house. property prices are falling at present. renting a house is fraught with problems and if you put the proceeds of your sale into a bank you should get about 5% which is more than you can expect from renting after cost deductions. Assuming house prices continue to fall in the short term you will therefore not lose out on any potential capital gain on a second property.

 

ams

[Fleur]

Thanks for the responses everyone.

The thing is, we want to buy another house for our old(ish) age requirements and are in a position to get another one, I couldn't stand moving out to a rental and then move again.  We've yet to finish unpacking boxes from coming here 4 years ago  [:)]

We just want to keep out of the tax/capaital gains traps.

 

[NormanH]

Buying a second house could get you into the capital gains trap, but only if you sell it before you have had it for 15 years.

When I suggested renting it was of something like a winter let of a furnished property, so you wouldn't really need to move in to it, just take your personal things and clothes.

[suein56]

[quote user="Fleur"]

The thing is, we want to buy another house for our old(ish) age requirements and are in a position to get another one, I couldn't stand moving out to a rental and then move again.  We've yet to finish unpacking boxes from coming here 4 years ago  [:)]

We just want to keep out of the tax/capaital gains traps. [/quote]

As I understand it - from friends who bought a new-to-them-home before having sold their old home - there is a 2 year window where you can have 2 properties. This is, of course, as long as they both come under the category of principal residence ie neither one is rented out and both are in the same name. They had a bridging loan to purchase the second property.

Sue

[ams]

You say that you have still not unpacked boxes after 4 years, I suspect that you really need to do a little research on the renting process and the consequences that flow from such a purchase.

 

1. Capital gains Tax.

2. Possible gross rental tax of 3%, in respect of properties over 15 years old.

3. Tax de equipment in respect of a new property.

4. Increased tax foncier.

5. Income tax.

6  Social tax.

7. CMU de base 8%, depending on age.

8. One sided tenants rights.

9. Lack of capital flexibility.

10. Increased administration.

11. Potential loss of capital in a falling market.

12. Acquisition costs, taxes and legal fees of between 3% to 7% of the actual costs.

13. Disposal costs.

14. Reduced indexed agumentation.

15. Renting costs. (Agents fees, insurance etc)

16. Legal reuirements and associated costs relating to energy, sewerage, electrical gas and natural risks.

 

ams

[Fleur]

 

Good Lord!

It's enough to put one off owning anything here!

All we wanted was to be able to buy a house that we may have fallen in love with, before selling this one.

[mint]

Fleur, I am in no position to give you any advice but I'll tell you what I have decided.

Like you, I want to move (I say "I" because the OH is less keen) and I asked more or less the same sort of question as you have (apart from the renting bit because we know about the pitfalls of letting your property).

Many members advised me to sell before buying and so that is what I am going to do.  Just as well in many ways because with stirling falling so suddenly and unexpectedly against the euro, I am not too keen on bringing over extra funds to France.

Now we shall spend this year at least here in our house, go through with some of the improvements we had planned before we decided to move and see how the land lies next year.

If French house properties do fall dramatically, I feel that even though the value of our house will fall, the price of the house that we shall buy will fall as well.

Can't bear to think of changing thousands of £s into euros just now and then, if the £ gains against the euro next year, we'd have spent money that we wouldn't have much chance of recouping.  Also, if the worst happens and we couldn't sell our present house in a reasonable time span, we'd be losing out on interest on the money we would have spent on the new house!  Doesn't bear thinking about IMO.  But you might be in a much more comfortable financial position than we are.  So, I can't say, "don't do it" but I do say, "think long and hard" and work out what the various scenarios might be for you.

Think of the very worst scenario that could happen and ask yourself whether you could live with that.   

[Chancer]

[quote user="ams"]

You say that you have still not unpacked boxes after 4 years, I suspect that you really need to do a little research on the renting process and the consequences that flow from such a purchase.

1. Capital gains Tax.

2. Possible gross rental tax of 3%, in respect of properties over 15 years old.

3. Tax de equipment in respect of a new property.

4. Increased tax foncier.

5. Income tax.

6  Social tax.

7. CMU de base 8%, depending on age.

8. One sided tenants rights.

9. Lack of capital flexibility.

10. Increased administration.

11. Potential loss of capital in a falling market.

12. Acquisition costs, taxes and legal fees of between 3% to 7% of the actual costs.

13. Disposal costs.

14. Reduced indexed agumentation.

15. Renting costs. (Agents fees, insurance etc)

16. Legal reuirements and associated costs relating to energy, sewerage, electrical gas and natural risks.

ams

[/quote]

Hi Ams

Good to see that you are still in fighting spirit, don't let les bâtards get you down[:)]

editted: I cant believe that I got that past the swear filter so I guess it must be mis-spelt[:-))]

[NormanH]

[quote user="Fleur"]

 

Good Lord!

It's enough to put one off owning anything here!

All we wanted was to be able to buy a house that we may have fallen in love with, before selling this one.

[/quote]

I think you have answered your own question!

You have fallen in love with a house...

The head says it might not be a good idea, but the heart...

I have always bought with my heart and always lost out financially, but don't regret it because I  was happy.

[ams]

Hi JR,

 

We have a neighbour called JR Batard, now i wonder what would be the english translation of his surname. !!!

 

Yeasterday we got a request for a receipt "quittance de loyer", so like any good accountant typed up an invoice/receipt and sent it off to the armée d'lair, not good enough, they would only accept one that i had to purchase in the local stationery shop. On the second box of VALIUM, !!!!!!!!!!!!!, the wife was in fits of laughter over the matter.

 

best regards,

 

ams

[Mikew]

Fleur:

My OH is having second thoughts about the size of this garden, state of my back and the rapid growth of weeds! House is quite large as well. We have decided that the costs of moving will, if needed, pay for quite a lot of gardening help, especially as you get a chunk back using cheque emploi. So staying put for the present.