If the time has come to sell your second or holiday home in France, British owners, as non-EU citizens, must now engage a Tax Representative to handle the calculation and payment of their Impôt sur les Plus Values, or Capital Gains Tax (CGT).
Who pays CGT?
In France, CGT is payable on the sale of land or buildings, shares and certain other personal property, with both individuals and companies liable. If a second home has increased in value, CGT is levied on that increase. If the property is valued at less than €150,000, however, it is exempt from CGT. If it is your principle residence, you are also exempt from paying CGT.
There are two payments due on a capital gain, the CGT and a social levy. The standard CGT on the sale of a property remains at 19%. The standard social levy charge for EU residents is currently 7.5%, but following Brexit, British homeowners now have to pay the non-EU charge of 17.2%, making a total of 36.2%.
If you have owned the property for longer than six years, a taper relief exists for both CGT and the social levy. For CGT the rate decreases after 6 years of ownership, with no CGT due after 22 years. The social charge taper also starts at year 6 with no charge applicable after 30 years of ownership.
The Mandatory Engagement of a Tax Representative
As these calculations are complicated, it’s wise to engage a tax representative to take care of them, but it’s actually a legal requirement in the following circumstances:
- you are a non-French resident, the sales price is above €150,000 and you have owned the property for fewer than 30 years
- the property is owned by a company registered outside France, regardless of value or years owned
- the property is owned through a company, or Société Civile Immobilière (SCI) not subject to company taxation, with shares held by non-French residents above €150,000 and the property owned for fewer than 30 years
What is the Role of a Real Estate Tax Representative?
The tax representative calculates the capital gain or loss related to the sale of your property and takes charge of the entire procedure, handling all necessary paperwork.
For further details or a consultation, 1st for French Property are delighted to have partnered with a Certified Chartering Accountancy firm based in the south of France, dedicated to providing clients with a full taxation and company management service.
Their fully bilingual team will provide the necessary expertise to help you comply with all areas of French tax obligations and declarations, including:
- French rental income return
- French SCI tax return
- French income tax return
- Company incorporation and closing
- Full accounting services
- VAT returns and refunds
- French tax representative
Their subsidiary company was set up as a result of Brexit, to assist British owners with the sale of their properties, and will take care of all fiscal aspects, working directly with the appointed notary, or notaire.
Selling a property can be a stressful enough experience as it is, but an experienced Tax Representative will take care of an important part of the process. Just fill in the form on this website and a member of their bilingual team will be in touch.