French apartment tax

thanks for all that

Just another thought- The apartment i purchased in Paris 2 years ago wa s new-should i have claimed the vat back if i had registered for vat in France??

Does anybody know if on all new apartments in france the VAT can be claimed back-i.e is it just french leasebacks that this is the case??

As far i know, just on leaseback properties & assuming certain conditions are met.

I am thinking of selling my apartment in Paris after 3 years ownership. Are there any imp;ications to selling within 5 years -i hear there is?

Don't know about france, but you have to pay CGT in Ireland subject to the usual allowable deductions. As the Double Tax agreement with france does not cover CGT you have to pay the tax due in france on selling the apartment and also CGT in Ireland with no credit allowed against your Irish Liability

The Double Tax agreement is currently being renegotiated but no idea when it will come into effect.

If you are resident in Ireland, the French CGT rate for an EU citizen is 16%:-

- less acquisition and sale costs
- less cost of any improvements made (if you don't have receipts, they may allow up to 15% deduction)
- less reduction for period of ownership - 5% for each year after the 2nd
- less cost of tax advice
- less indexation allowance ( a scale is published annually)

The gain is collected by withholding tax of 33.33% at the time of the sale and any balance due to you can be recovered by submitting a tax return.

You may be exempt from CGT if you have been tax resident in France at some stage for more than one year.

You will also have to pay CGT in Ireland as asdfg pointed out, however, I understood that the balance of 4% (difference between Irish CGt @ 20% and French CGT @ 16%) would be payable here?

If you purchased as part of a leaseback scheme and received a VAT (TVA) refund, you may be liable to pay part of this back.

I got the above info at a tax seminar on French Property at the 'House Hunters in the Sun' Exhibition at the RDS - I am not a tax expert and you may need to get professional advice in order to minimise the taxable gain.

Here are details of tax consultants who deal with French property taxes - they are based in the UK, but say they are happy to advise Irish clients. Blevins Franks Group.

Another possibe source of information is this Dublin firm of solicitors - Tom McGrath & Associates who may be able to assist you - have a look at their [broken link removed]and decide for yourself.

You will also have to pay CGT in Ireland as asdfg pointed out, however, I understood that the balance of 4% (difference between Irish CGt @ 20% and French CGT @ 16%) would be payable here?

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My understanding is that french CGT is payable and Irish CGT is also payable @ 20%. The double taxation agreement does not cover CGT as it currently stands so the tax is due in france and ireland and you do not get a credit for the tax paid in france against your irish CGT bill.

So if delgirl is correct about the rate you pay a total of 36% in CGT subject to the usual deductions which may be different in both countries.
If your told different ask to see where it is covered under the Double Tax agreement with [broken link removed]

Meccano said:

Cross4; in France there are very heavy rules about how you can treat a tennant.
For instance - between the months of October and May you cannot evict a tennant even if they are seriously in default of rent. Basically you are stuck with them.

An unfurnished property is especially risky because you are required to sign a lease of a minimum of 1 year, and at the end of that year the tennant has the overriding right to choose to extend it for another year.
If you want to evict them you can only do so on the grounds that you are:
a) Going to sell the property
or
b) Going to move into it yourself.

If you are going to sell it, you must give the tennant first refusal on the sale!!
If you say you are going to move into it (to shift them) and then don't move in - and they can show you've not moved in - then they can sue you for the rental income you've made from a new lessor/ and - or - demand to be re admitted to the property.

The rental period on an unfurnished property can be no less than 12 months under law. The rental period on a furnished propert used to be a minimum of 6 months, but they've just upped it to 8 months, with a 12 month extension clause.

I really can't figure why anyone would go into the long-term French rental market. Short holiday lets is the only way to go.
If you let long term to a French native - you are mad.

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What are the differences between letting furnished & unfurnished? The laws are apparently not as slanted towards the tenant in the case of furnished property - but I'm not clear on specifics.
I'm thinking about a city-centre furnished apartment but don't want to get into a messy situation. If renting is popular in France then there are obviously a lot of landlords there who are willing to take it on?
(I'm not asking about tax - just the rights of tenants versus landlords.)

delgirl said:

- less reduction for period of ownership - 5% for each year after the 2nd

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This has changed on 01/01/2004. It is now 10% per year after 5 years for 10 years. So, it now takes 15 years to be 100% exempt of CGT in France (instead of 22 years)

delgirl said:

The gain is collected by withholding tax of 33.33% at the time of the sale and any balance due to you can be recovered by submitting a tax return.

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I think this is only applicable to non-EU resident. 16% is applicable for EU resident, resident outside of France.
(For info, 26% is made up of 16% tax + 7.5% CSG social contributions + 0.5% CRDS + 2% another social tax - non-French resident are exempt of CSG, CRDS and the 2%).

cunninghams said:

I am thinking of selling my apartment in Paris after 3 years ownership. Are there any imp;ications to selling within 5 years -i hear there is?

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One thing (the only one?) is that you will not be allowed to increase the purchasing cost by 15% to reduce the French CGT liability.

Re renting furnished or unfurnished, we are currently renting our old Paris flat unfurnished. The minimum lease on an unfurnished place is 3 years, but we don't see this as a hindrance. OK, it doesn't mean the tenant can't move out in the meantime, but chances are he will stay and that will be another three years taken off our mortgage, paid by him! We have no intention of selling any time soon, so the longer it is rented, the better. And so what if he gets first refusal if we do decide to sell? As long as he can come up with the price we are looking for, what's the big deal?

We are actually in the process of buying another flat in Paris, with the intention of letting it unfurnished too. You need to remember that in Paris, once your flat is over say about 60sqm, chances are tenants have their own furniture and it can actually be quite difficult to rent it furnished, unless it is short term rentals to tourists or business people. We were seriously advised against renting our place furnished as the chances of finding a tenant quickly would have been slimmer. Also, a furnished place involves renewing the lease every year, which as I said above is more hassle for us than it is worth.

So, just to say, don't rule out renting unfurnished, it works for thousands of landlords in Paris, including us! (And we didn't even use an agent to find the tenant, just the website which enables individuals to buy and rent from each other without paying agency fees.)

Paris