Selling house in N Ireland + buying in France overlap CGT question
 

Hi Guys:thumbup:


Quick question on Capital Gains Tax and houses.

Catherine has a house in Northern Ireland that she wants to sell. Paid 150K in 2009. 20K deposit and 130K mortgage

It's worth 135K now, mortgage is 115K, so it's worth less than she paid for it, but she'll still end up with 20K (here or there)

Is that classed as a profit?

To add to this, she is planning to sell the house in Ireland AFTER we have bought the plot of land in France.

So for a period she will own two 'properties' (Ireland will be sold in Nov time). That's if the French plot goes in her name, could go in her Mum's (owns other properties so probably not so good. I don't own any property though.

What we don't want is for it long term to affect our French place we're building CGT wise.

Thoughts? I'm a bit confused here:blink:

Cheers! Aaron.

Re: Selling house in N Ireland + buying in France overlap CGT question
 

Hi Aaron,
I assume that N.I. is roughly the same as the rest of the UK.
You don't pay CGT on your main residence.
You only pay CGT on your GAIN on the sale of an asset (other than main residence).
The mortgage doesn't come into the calculation - just the profit on the sale and in year 2017-2018 the first £11.5k is tax-free.
Most UK citizens don't complete a UK tax return therefore there is nowhere to declare any Capital Gains. (although they should).
The house is Catherine's main residence and she will not in any case make a profit therefore you do not need to worry about CGT.

Re: Selling house in N Ireland + buying in France overlap CGT question
 

Thanks Cyrian. I didn't think it would be a problem, but you never know...I will bring it up with the notaire and see what he says also.

Cheers.

Re: Selling house in N Ireland + buying in France overlap CGT question
 

Where does Catherine live? CGT is usually payable where you live, not where the asset is located. ..... But as the sales price is expected to be less than the price it was bought for the question is moot as there is no gain to tax.

Re: Selling house in N Ireland + buying in France overlap CGT question
 

Sorry, I disagree with that.
If I sell my home in France then CGT is deducted by the notaire. In addition, France also proposed charging social charges on top. This was overturned by the EU as being illegal.
Once France deducts CGT, I have then to declare the sale of the overseas asset and the tax already paid on my UK tax return.

https://www.frenchentree.com/french-...tal-gains-tax/

Re: Selling house in N Ireland + buying in France overlap CGT question
 

I don't know what you are disagreeing with, because you have restated what I said, with the "French exception", which now closely reflects the UK exception. ..... I will admit to not being clear about my use of the word "usually". :o

If I sell my home in the UK it is taxed in the US (I live in the US), and the UK only changed the law on that last year, and we are still in the transition phase.

The analogy is with shares and other investments - it doesn't matter where the shares are held, which stock exchange you bought them on, or where the company is registered, when you sell the shares ane make a gain, generally speaking you pay tax where you are tax resident.

Re: Selling house in N Ireland + buying in France overlap CGT question
 

Hi guys.

Catherine is N Irish, although we both live together renting in London and we're buying a place in France (i'm from London).

I'm just worried that the the France place will be seen as the 2nd home and be taxed, I don't mind if it's the Irish home as that's got no money in it anyway

Do you kind of get what I mean?

Re: Selling house in N Ireland + buying in France overlap CGT question
 

I live in the UK.
When I sell my French home, the CGT liability is in France.
Whether there is further CGT liability in the UK is unclear but I must declare the gain and tax already paid.
If the CGT paid is higher than in the UK then I do not get any refund.
I do not know about the USA but between the UK and France the CGT is payable where the property is and not where you live.

Re: Selling house in N Ireland + buying in France overlap CGT question
 

No, to be frank.
Firstly, by definition CGT is only an issue if there is any capital gain to tax (ie plus value between the original purchase price and the final selling price, sometimes with allowances for money spent on it). From what you say there will be no capital gain.

Secondly, what is "seen" as a second home or a main home, for the purposes of calculating CGT at the time of selling, depends on what its status actually "is" at the time of the sale/putting it on the market. It doesn't matter what it was bought as or what it was used as prior to that. You make it sound as if you expect to be taxed for owning a home - well you are in that you pay property taxes on it, but you have to do that in any case. The purchase process itself is exactly the same whether you buy it as a main home, a second home or whatever. After that makes a different because the property taxes are calculated differently according to whether it's your résidence principale or not, but again, it will be "seen" as what it is. Your residence status is important for all kinds of reasons - tax, social security, benefit entitlements, CGT on the sale of property - so it can't be a grey area, and in fact it's a pretty clearcut issue for most people.

Re: Selling house in N Ireland + buying in France overlap CGT question
 

I still don't know quite what you're getting at, but in France you cannot buy a property and put it in someone else's name. You have to pay for it with your money and the transaction is done your name. The provenance of funds is very transparent these days, banks have to track all movements because of money laundering regulations.

You need to realise that property ownership and patrimony is very tightly regulated in France. Letting people own property but having it someone else's name on paper, would open all kinds of loopholes and opportunities for various kinds of tax avoidance. All property sales are handled by a notaire, and the main raison d'être of a notaire is not being a solicitor but being a state representative and tax collector - so he keeps a close eye on all this.

Re: Selling house in N Ireland + buying in France overlap CGT question
 

Countries generally tax you where you live, some also tax you where the asset is physically located. That's all.

Re: Selling house in N Ireland + buying in France overlap CGT question
 

Are you actually going to be living and working in France?
If not your French place will be a 2nd home anyway and will be subject to CGT when sold.
I wouldn't worry too much about any profit in the present property market.

Re: Selling house in N Ireland + buying in France overlap CGT question
 

Cardi has understood what you were asking better than I did! and he's answered it too.

Even if it's the only property you own, it is still a second home if it's not where you live. It isn't unusual for a person's "main home" to be a property they rent, and the property they own to be their second home.

Re: Selling house in N Ireland + buying in France overlap CGT question
 

Great info guys.

Thanks for taking the time to reply.

I'll be back shortly to update the thread.