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Borrowing in UK to buy property in France - can the rental income be offset against French tax liabi

Posted by quiet apartment, near Monte Carlo - Created: 5 years ago
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Posted by eurokiné-187861 - 5 years ago

there is talk of heavily taxing vacant properties to encourage people to put  them on the rental market but I dont think anything is decided yet (decisions seem rather more long winded these days). There is definately a lack of reasonably priced, correct quality rental properties in the big towns & here on the coast so if the idea does take off down here will undoubtedly be one of the first areas to be doing it.

There is also the risk that in France a change in something voted today often has repercussions on things which are already in progress (changes in tax advantages for life assurance & loi scellier etc)-having signed up  for something under one lot of rules doesnt protect you. If the rules of the game change, you are included 

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Posted by quiet apartment, near Monte Carlo - 5 years ago

Many thanks indeed for this info.

Because of the difficulty globally with financing a property purchase:

a. banks such as Barclays in France now no longer lend mortgages to non-residents, only to resident tax-payers under "Loi Scellier" schemes etc.  I don't want to open an account with another bank, and don't think I'd qualify for a French mortgage anymore anyway. as I am near retirement.

b. it is much easier to unlock equity from an exisitng property, eg. the UK, where the bank has already had a mortgage for 20 plus years and knows the customer  and risk well, and is willing to remortgage.

As regards French politics, governments of both left and right have had policies to increase the rental stock, and indeed France is a model to the world in this. Typical French townscapes are of boulevards and cafe society, with wide streets and apartment buildings 11 storeys high. These buildings have many rented apartments, which do not turn into slums. By contrast, English cities are divided into poor and affluent areas.  So French policy of encouraging "buy-to-let" has been a huge success, and it started decades before England, yet journalists in England write as if "buy-to-let" was invented in England. How deluded can people get!

A.  Given the desire of French governments to increase the rental stock, surely they would welcome investment to let from abroad? So if I could show that I have remortgaged say £100,000 to buy a studio in France, and have the bank statements to show the loan, plus the transfer to the notaire in France, this should be sufficient?  Or not?

B.  What if I buy a studio and it is not rented out?  I know in Spain the bankrupt government "imputes" a rental income even when it is not rented out, but then Spain is the country of the "land grab" and other dodgy tricks which are part of their culture. By contrast, France has a more serious reputation.

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Posted by eurokiné-187861 - 5 years ago

no, even the previous government didnt accept this!

 the rental income must ALWAYS be declared on your declaration d'impots under revenue foncier & is liable to taxation with certain deductions that the tax people themselves calculate (not sure how the cost of the mortagage offset thing works as it's dependant on when you take out your loan & I'd understood it to be for primary residence not investment purchases). Purchases under various tax reduction schemes like loi scellier are a little different but the current governement are not looking to increase the niches fiscales, quite the opposite.

Even if you are non resident in france for tax purposes, any income received here should be declared here.

The new governement are imposing taxes on everyone, not just the defenceless foreigners.

Check with an investment advisor or accountant