4 Property | Your English estate agent in France and Lake Tahoe

CAPITAL GAINS TAX

TVA (VAT)

TVA is the French equivalent of VAT. 19.6 % is imposed on new builds or if the property is sold for the first time within 5 years of completion. This is generally included in the vendors sale price and will not be added on top.

Insurance

If the property you are purchasing is in an apartment block, the property is insured by the managing agent. You will need to take out supplementary multi-risk household insurance for your moveable assets. Please note that if the building is less than 10 years old it will also continue to benefit from the obligatory 10 year building indemnity insurance.

Capital Gains Tax

This is a complicated subject and so many rules apply depending on your personal situation. But the gist is that Capital Gains Tax (CGT) is due on the sale of a second home if the property has been owned for less than 15 years. This tax is imposed at a rate of 33% and is reduced by 10% per annum once the property has been owned for more than 5 years. This rate can vary, depending on your situation, e.g. it its 16% for a non French resident but a European community resident and 27% for a French resident. If the owner lets the property as a professional activity, (commercially, through a company) for more 5 years and he is registered to the court office and if he sells the property, he could have a capital gain tax exemption and provided the turnover is under 250.000.

Inheritance Tax

Anyone who knows the French system will understand how complicated it is to explain the inheritance laws. It is advisable to see a French notaire to go through your personal situation and to ensure you get the correct advice. We can help you set up a meeting.

Income Tax

Income tax on the rental revenue is due and your property must be registered as being rented with the administration. Once registered, you will do a tax return with a French accountant who will calculate your income tax liability against your rental income. It is not as bad as people think! But a return must be done in France, not the UK as the property is in France. We work with a great accounting firm in France who have an English office. Ask us for details and we can put you in touch with them to register you, do your returns so you can sleep at night.

Local Tax

There are 2 local taxes:

Tax d’Habitation or Occupation tax. The amount due per annum depends on the commune, and the size of the property. If you rent your property professionally and it is duly registered as rented with the authorities, as the company you rent with pay Taxe Professionel, this will reduce your taxe d’habitation liability. This is because the company you rent with pay the Professional tax, that negates or reduces your d’Habitation tax.

Tax Foncier or property tax. The amount due per annum again depends on the commune rate and the size of the property and if it is old or new. All sorts of rules apply. Both tax amounts are issued on our Spec sheets that we hand out if you are interested in a property.

Annual Charges

Annual charges in a residence (apartment block) are relative to the total annual costs of the building and generally managed by the ‘Syndic’ or management company. Such costs are divided by the total number of owners on a pro-rated basis. Naturally such costs can vary according to the decisions made by all the owners (the co-propriete) and a provisional budget is put forward at each annual general meeting.

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FRENCH BUYING PROCESS

HEAD OFFICE: BP 114, Val d’Isere 73152, cedex, Savoie, France
T: +33 (0)4 79 40 18 48 F: +33 (0)4 79 22 69 87. E: sales@4propertysales.co.uk