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Capital Gains Tax changes from Jan 1st 2004

Posted by rosetta-185721 - Created: 14 years ago
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Thought this might be useful for any non-residents with property here - you are now exonerated from CGT if it's your principle residence on the day of the sale, or if you are in the EU are not French resident, but have been domiciled in France in a continuous way for at least two years at any time prior to sale.

If you are non-resident/non-domiciled, the tapered relief has been changed so that CGT is reduced by 10% a year after the first five years, so there's now no CGT to pay after 15 years - think it was 22 years before?

Ro

 

 

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10 replies (Showing replies: 1 to 10)

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Posted by Rob-180901 - 14 years ago

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The new rules adapt CGT to be more like the system for shares. Inflation allowances are abolished and taxation of any gain will be at a set rate of 16%, plus the inevitable 10% CSG and other “social taxes”. The tax rate will continue to be 33.33% for non EU citizens.

 

The allowance for length of ownership also changes. From 1st January, there is no allowance for the first 5 years and then 10% per year thereafter, meaning that the sale becomes tax-free after 15 years instead of 22.

 

If a property is "deemed" your principal residence on sale then you should not pay any capital gains tax.

 

If you move in to, what was, a "maison secondaire", it does not automatically become your principal residence, and will only be deemed as such after five years living there, on a full time basis, unbroken time period.

 

If the value of the property being sold is under €15,000 it is exempt (not that common on the CDA)

 

If you are an EU citizen and non French resident and have owned a property in France, which has been a main residence (at any time prior to the sale) for two years, it is exempt.

 

There is a tax free band of €1,000.

 

Construction, reconstruction, extension, renovation or improvement works which are borne by the vendor, may be offset against any bill. When the tax payer sells a property five years after purchase and is not able to provide proof of the expenditure, the original purchase price is increased by an amount equal to 15% (to represent the cost of the works).

 

French law does not distinguish between residence and domicile. If you are resident you are also domicile. The differences between the UK and France, for instance, are covered separately by the double tax treaty. If you are living in France, buying a burial plot etc. does not change this.

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Posted by Sailor 2-192599 - 14 years ago

Have I understood this discussion correctly?

Capital gains tax on the sale of non-principal residence:

1. Non-French residents

Sliding scale, with no more CGT to be paid after 15 years of ownership

2. French residents

Flat rate tax of 25%, no matter how long you have owned the property

Surely this can't be right ... that would mean that non-residents are treated much more generously, and that at some future date it would make sense for me to leave France before selling my property?

Sailor 2

Sailor 2

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Posted by LaDraille-183995 - 14 years ago

What I meant to type was....

I was at the tax office this morning in Le Plan de Grasese and asked the same questions.  The answer I got was that as of 01 January 2004 it is a flat 26%.

 

 

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Posted by rosetta-185721 - 14 years ago

If it's 15.000 euros or less you don't pay CGT, but you can offset bills for construction etc against CGT on a second property to reduce CGT.   

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Posted by rosetta-185721 - 14 years ago

hi Lynette,

yes that's right if you are French resident, but the rules on the amount you pay if you aren't French resident have changed. I'm not French resident (yet) but hopefully will be by the time I sell the house!

Ro

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Posted by English_girl - 14 years ago

Does anyone know if there is an amount up to which you don't pay CGT if you sell a property which isn't your main residence?

 

Thanks

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Posted by lynnettejane - 14 years ago

Hello all, I thought that you do not pay capital gains tax at all if your property is your principal residence. I am sure I have read that on these forums, regards Lynnette

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Posted by LaDraille-183995 - 14 years ago

I was at the tax office this morning in Le Plan de Grasese and asked the same questions.  The answer I got was that as of 01 January 2004 it is not a flat 26%.

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Posted by steveB-186247 - 14 years ago

For Jonboy and others,It's a long time since I looked at Capital Gains Tax legislation, and my only expertise is with English tax laws, but I was told that Domiciliation is where you are considered as a citizen, being your elected nationality, whereas residence is where you live at any particular moment in time.Thus, a principal private residence clause automatically demonstrates residence, but not necessarily domicile.To change your domicile, you have to select a country where you have permanent ties, eg where you have recently purchased a burial plot.I hope this is of use...sjbsjbcontact:(office)mc97977183

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Posted by jonboy-191946 - 14 years ago

Ro,

Can you explain this last bit please?

"if you are in the EU are not French resident, but have been domiciled in France in a continuous way for at least two years at any time prior to sale".