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Capital Gains Tax

Capital Gains Tax

Old Sep 28th 2019, 6:01 pm
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Default Capital Gains Tax

I bought a fixer-upper in France in 2014 but now, mainly due to ill-health, have to sell up in France. It was intended to be a second home and I am not registered as a resident in France. The French tax authorities are aware that it is a 2nd. home. The renovation process is 99% complete but following an argument with the builder/renovator I have no builder's receipts, I do however have most of my receipts for visits to the builders' merchants (mostly in France) where I paid for the materials for the renovation process.
I have now sold the fixer-upper/2nd. home but the notaire informs me that I must pay capital gains tax.
I'm sure that I read a few years ago that for DIYers wishing to avoid Capital Gains Tax, some kind of law exists whereby I can submit my receipts and an allowance is made for the receipts PLUS 30%. Did I dream this or does this only apply to main or first homes or just residents in France?
Any help would be gratefully received as the amount the notaire is quoting would put a serious dent in my plans for the U.K.
P.S. - I do not wish to approach the builder as he's a former inmate of Wormwood Scrubs and two German jails for GBH and I like my face the way it is.
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Old Sep 28th 2019, 8:02 pm
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Default Re: Capital Gains Tax

Originally Posted by Dai Cooder View Post
I do not wish to approach the builder as he's a former inmate of Wormwood Scrubs and two German jails for GBH and I like my face the way it is.
Does he not read or go on the internet because from that statement it's probably not going to be hard for him to work out who you are referring too.
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Old Sep 29th 2019, 6:50 am
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Default Re: Capital Gains Tax

https://www.l-expert-comptable.com/a...condaires.html

In the above link there is mention of a 15% allowance being added to the original purchase price, to allow for any improvements that might have been done, with no proof of expenses required. The allowance increases if you can show that the actual cost of the work was more than the amount of the 15% allowance.
This allowance only applies, however, if you owned the property for more than 5 years.

I think this information dates from a few years ago so definitely check to see if it’s still valid.

I would have thought your notaire should know about this stuff. Failing that, maybe pop into your local tax office? I visited the one in Strasbourg recently and they were really nice.
Good luck!
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Old Sep 29th 2019, 6:53 am
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Default Re: Capital Gains Tax

Here’s the relevant extract in case my link doesn’t work:

Le calcul des plus values sur résidences secondaires

La plus value imposable correspond à la différence entre le prix de cession et le prix d'acquisition de la résidence secondaire.

Le prix de cession s'entend du prix stipulé à l'acte diminué des frais de cession (comme les commissions de vente, les diagnostics obligatoires ou les honoraires d'architectes).

Le prix d'acquisition correspond au prix versé lors de l'achat. Il est majoré forfaitairement de :
  • 7,5% pour tenir compte des frais d'acquisition (mais le vendeur peut comptabiliser le montant réel de ces frais)
  • 15% pour tenir compte des travaux réalisés sans justification nécessaire, si l'immeuble a été acquis depuis plus de 5 ans (il est possible de justifier, s'il est supérieur, le montant réel des travaux de construction, reconstruction, agrandissement et amélioration)
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Old Sep 29th 2019, 9:09 am
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Default Re: Capital Gains Tax

Hi Dai
From previous posts, you have owned the house for more than 9 years.
After 5 years the rate of CGT in France reduces over 30 years until it reaches zero.
In addition, you need to declare the gain and tax paid in France to HMRC.
The notaire is required to deduct all taxes due on the sale.
He estimates these taxes and fees and probably adds an element just to be sure.
Any surplus after the taxes have been confirmed should be returned to you.
It is up to the notaire to calculate the CGT and you should ask him what he will accept to mitigate the tax.
If you included any furniture or the kitchen in the sale then these can be deducted from the sale price for the CGT calculation.
HTH
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Old Sep 29th 2019, 1:23 pm
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Default Re: Capital Gains Tax

Hi Cyrian,
No it's a different house. I went back to the U.K. for a couple of years then dipped my toe into France again in 2014 but thanks for your reply .
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Old Sep 29th 2019, 1:24 pm
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Default Re: Capital Gains Tax

Thanks Helen for your replies and link.
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Old Oct 1st 2019, 5:23 pm
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Default Re: Capital Gains Tax

If you go to www.notaires.fr click on the heading Housing /Tax system you will find an explanation of CGT including how it is calculated /reductions THe English translation is a bit dodgy but you can get the drift There is a button top right to change the language
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Old Oct 2nd 2019, 5:28 am
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Default Re: Capital Gains Tax

What a useful link. Thanks very much.
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