UK Resident Selling Property in France

To be eligible for French tax residency, most francophiles are concerned about completing a transaction before the end of the calendar year. Before January , being able to prove residency at an E.U. country’s residence would help secure permanent residency privileges, which are projected to become more difficult in the future.

Despite the rush to finalize a purchase in France, it’s essential to keep in mind that selling a home in France will be altered in the near future.
When it comes to buying or selling a property in France, if you haven’t started the process by the time you’re reading this, you won’t be able to do so before the new post-transitional Period rule takes effect. For now, even if the notaire can decrease various pre-completion notice periods, it is hard to achieve this goal in a French real estate transaction because of time constraints.

The capacity to transfer cash between the E.U. and the rest of the world is not expected to be affected by Brexit. As a result, remitting the proceeds of a transaction to the United Kingdom should be simple. As a result, I’m not predicting the future of the Sterling-Euro exchange rate. I’ll defer to your currency house’s financial specialists on this one.

The tax consequences of a sale significantly impact how the transaction is conducted. French capital gains tax is expected to be managed and computed differently from U.K. capital gains tax.

If you’ve ever sold a property in France, you’ve likely paid capital gains tax, which is a proportion of what you thought you’d make when you sold the asset. Profit is the difference between what a buyer pays for a product at the moment of sale and the initial purchase price, plus many extra costs.

For capital gains tax purposes, the sale of one’s primary house should have no ramifications. This may be possible as long as they are considered tax residents for income tax reasons from the residence currently being sold. It’s very uncommon for us to be asked why sellers must submit capital gains tax in France when the home they’re selling is the only one they own. People can rent a residence in the U.K. and then buy a vacation property there, which means that when they sell the vacation property, they are selling their only home and hence are subject to capital gains tax. The “principal private dwelling” exemption only applies to selling one’s primary residence when it comes to CGT. It is not your primary residence if you do not reside in the French property.

Consequently, no French capital gains tax is due if you’ve been residing in the French home you’re selling and have reported your international income to French income tax.

As is the case with every statute, there are a variety of exclusions and concessions that might decrease or eliminate the French capital gains obligation. It is possible to offset some of the costs of renovations, and the purchase price can be indexed to take into account monetary erosion’, which is the loss in the value of a currency due to inflation. However, the scope of this article does not allow for a comprehensive examination of all of these issues.

As a result, the capital gains tax will be reformed in 2021. If the transaction price exceeds 150,000€, a fiscal representative must be appointed. This is the first and most obvious need. There are two reasons for this: First of all, French tax authorities demand the right to evaluate any tax statement for four years after the transaction takes place; second, a French person or firm must stand as guarantor if the taxpayer is outside of the E.U. E.U. citizens living outside of France were formerly subject to a similar responsibility, but it was ruled illegal to treat E.U. citizens living in France differently from those living outside of France. This has altered as a result of our withdrawal from the European Union.

If your acquaintance is a French tax resident, you could ask them to perform this task for you, but given that they would be responsible for paying whatever tax they owe, it is unlikely that you would ask, and even less likely they would accept… If you wanted to use a buddy as a guarantor, you’d have to go through the tax office first.

Pre-approved service providers are, nevertheless, available to carry out this task. They will need the capacity to do their tax computations in advance of the sale to know precisely how much French CGT they will be liable for. Afterwards, they’ll demand that the notaire deduct this sum from the selling profits.
By employing a third-party organization to perform the tax authority’s computations, you may say that you are outsourcing the task entirely.
The actual tax rate is still another consideration. Until the end of the Transition Period, France’s CGT rate is 19%. From now on, the percentage will rise to 33.33 percent.

As a result, selling a home in France will cost the seller more money. If you’re concerned about the total amount due, you should thoroughly examine before disposing of anything. This will always rely on unique circumstances. In addition, any UK CGT that may be due should be included in, even though the UK-France Double Tax Treaty is expected to provide some relief.

Whatever deal is eventually struck, you may be able to hold out hope that British citizens will still be able to purchase and sell homes in other European countries on favourable terms.

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