Capital Gains Tax Allowances
February 19, 2008 by Tony · 3 Comments
Capital gains Tax (CGT) on the sale of a property in France for any house which is not a principal home starts at 16 percent up to 33 percent for non-EEC residents.
It reduces by 10 percent a year after the fith year of ownership and can be zero after 15 full years of ownership.
The costs of purchase and any major building or alterations can be deducted from the capital gains only if these are done by approved, certified French registered builders against validated and approved invoices.
The Notaire involved in the sale of a proeprty is legally resoponsible for investigating and approving all these bills.
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Dear Sir
My wife and I bought a Longere seven years ago for approx 20,000.euros which required complete renovation.
We proceeded to hire French registered builders and put in new walls,new floors,septic tank new roof and complete grounds.
The total cost for the renovation is approx 200,000 Euros and we are now intending to sell at about 250,000 Euros. Can we offset the renovation costs against any Capital Gains Tax if we are liable for this tax. We are retired and live in the U.K.
Many Thanks
Brian
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Dear Brian
If you have correctly receipted bills from the registered French builders and if this is for major construction and significant alterations (not repairs or decoration), then these bills can be allowed against Capital gains Taxes.
On the figures you give me, with the permitted allowances and costs, you should have very little to pay in CGT – it may be advisable to meet and talk to the Notaire you are considering using for the sale – their advice should be impartial and for this will be free.
Hope this helps
Bonne Chance
Tony
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Dear Tony
Many thanks for your prompt and informative reply, We will as you advise speak with a notaire when we proceed with the sale.
Regards
Brian
Tony,
There have recently been some captial gains tax changes in the UK which mean that it makes sense to transfer assets between partners to ‘lock in’ indexation and taper relief which will disapper from April this year to be replaced a by a flat rate of 18% CGT. Our place in France is in my wife’s name – it would be advantageous to transfer it to my name to lock in these UK allowances since it has trebled in value since buying it some years ago. Apart from starting the CGT clock at zero again in France (we don’t intend to sell in the near future), do you know if there would be any other financial implications under the French system?
Hello Hugh,
I strongly recommend you talk to an intelligent Notaire in France (yes there really are some) – in simple terms, transferring a property will mean you pay 7 percent costs and taxes of the current market value of the property to the Notaire – but doing this between husband and wife does, I believe, have some allowances.
I am also not sure about setting the clock back for French CGT – you may be able to make a “donation” or other way of structuringthe ownership to benefit from the UK regulations anf French allowances.