French Property Taxes & Legal Fees

Buying & Selling Property in France

From a barn restoration in Bordeaux, to a mazot conversion in the mountains there's many reasons why people are interested in purchasing property in France. Make sure that before you attempt the process of purchasing your property in France you are fully armed with the knowledge of how to locate, purchase and even live in it!

Foreign Property Taxes & Legalities

Many people can think that buying a house in a foreign destination will be much cheaper than buying a property in the UK. Whilst this may be true, it is advisable to take some time investigating and understanding your tax and legal position before you make concrete decisions about your dream property as they can add significant amounts to your purchase price and annual maintenance charges. Don't rely on your estate agent or seller to furnish you with all the facts, they' are afterall after the sale and wont want you to be delaying that process completing.

When buying in a foreign country, you should always consider the tax implications of buying, selling and possibly renting out your property. Taxes rules and rates can vary immensely from location to location so make sure you have done your homework as unexpected taxes could be crippling for you further down the line. Your tax situation may well be affected as a result of your foreign property purchase so advice should be sought from a professional who can offer specific guidance on issues such as

taxation in the UK

capital gains tax

succession laws and inheritance tax

foreign taxation

and

double taxation implications

For example, did you know that if you decide to rent out your property abroad you will need to declare this income to the taxman in the UK and potentially the country where you have bought the property, no matter how small the sums involved? And, did you know that most countries will apply some form of 'gain taxation' against the sale of a second home? You may therefore wish to set this off against the profit you make on your purchase when selling it at a later date. You should also be aware that some countries have different succession and inheritance taxes and laws that are very different to that in the UK which can lead to expensive traps for the uneducated.

These are just a few areas within the complex subject of property taxes which may, or may not be applicable to you when purchasing your property abroad. It's therefore vital that you seek solid tax and legal advice before taking the plunge on any type of foreign property.

Please note that foreign property taxation and legal issues are complex and difficult subjects with which you should seek independent advice indivdual to your requirements. Taxes and legal issues outlined here are merely general in nature and therefore no liability is accepted in connection with the information provided.

last updated 31-Jan-2008

General French Taxes & Legal Fees

As a property owner in France, you will find yourself liable for a host of different taxes depending on your individual circumstances. As individual circumstances can vary immensely from on property owner to the next, it is recommended that you seek further specialist tax and financial planning advice from those in the know. Here is a summary of a few taxes which you may find relevant to your French property purchase:

Wealth Taxes
If you own property in France you may be liable for a wealth tax on your property. Wealth tax applies whether you are a resident or non-resident of France as it is dependent on your property value. If you are resident in France (ie. you spend more than 183 days a year there), the tax is levied on your worldwide assets. If you are a non-resident of France, the tax applies to your French assets only. France�s wealth tax is paid in June and is imposed on assets worth more than �760,000 (�514,000). For further information on wealth tax click here

Capital gains tax
If you come to the point where you want to sell your home in France and it is your principal residence, as long as you reinvest any profits made into another property you will not have to pay capital gains tax. If on the other hand your home is a second or a holiday home or even a commercial type property that you rent out and/or somehow generate an income from, you may be liable to pay tax on any gain you make from the resale of it. The amount you could be liable for is complicated to calculate as it can also be in the UK and so you should actually take professional advice on this point.

Inheritance Tax
When purchasing your property in France, it is wise to give a little consideration to your personal circumstances and your longer term tax positions. There are 'rules of succession' in France which means that all property passes automatically to children of the deceased and under some instances of French law, not able to dispose of your estate as you see fit. Inheritance Tax in France is not cheap and is pretty complicated. Since we are not tax specialists, it is highly advisable that you take advice on both the French and UK legal systems before taking the plunge and signing the acte de vente!

Chamonet.com Top Tip
In researching this article we came across an article written by Paula Hawkins for �The Times online� entitled �French moves�. This article describes a loophole in the current UK and French tax law which means that anyone with second or buy-to-let properties that move permanently to France can currently sell their UK properties after they move out without any liability to UK or French Capital Gains Tax. Apparently this �loophole� is due to be closed once the UK/France double taxation convention is ratified, but will not take effect in France until January 01, 2008. There are caveats, if you wish to find out further information from this article, please click here.

last updated 31-Jan-2008

Local French Property Taxes

In taking ownership of a property in France you should be aware of the various �local taxes� which will apply to your property. Land tax (taxe fonci�re), occupancy tax (taxe d�habitation) are used to pay for services including refuge collection, street cleaning, schools and other local community facilities. It is important to understand that these two taxes are paid whether you are ordinarily resident in France, and/or whether this is just your holiday home. These taxes are set by the local authorities and, as in the UK, these can vary considerably depending on the area. Tax fonci�re tends to be the more expensive of the two.

Tax fonci�re is paid by the owner of the property and is calculated using the likely rental value of your home.

Taxe d'habitation is paid by the occupier of the property, ie. your tenants if you rent out the property. It can be paid in monthly instalments from your French bank account to make it a little easier for you to manage. You can potentially be exempt from paying the taxe d'habitation if your property is completely empty and has no utilities (ie. water or electricity).

last updated 31-Jan-2008