Irish loan used to buy in france-tax position

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WILLY NILLY

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A colleague is remortgaging the family home in Dublin and will use the loan to buy a holiday home in france which will yield a rent per annum of 8k. The Interest on the loan will be 5k approx.

Can this 5k interest be set against the 8k rent when computing the tax liability for the French tax people. What is the basic rate of tax in france?

If he pays say 2k tax in france , will he get a credit for this from the Irish Revenue when filing his tax return to the irish Revenue?l
 
Yes, it depends, and yes — in that order. See [broken link removed] for Revenue's treatment and here for tables of standard income tax bands in France.
 
thanks for your response DrMoriarity.
I have read that tax leaflet and all it does is deal with the Irish tax position in relation to rental income. It does not say that an "irish" loan is allowable by the French tax people against freanch rental income especially as there is no mortgage on the freanch propert ....I have a skeaking feeling that the feanch may disallow it but I am not sure
 
I think you're right WN and the Doc is wrong(ish).

http://www.askaboutmoney.com/showthread.php?t=30669

The interest is allowable against the liability to the Irish Revenue. You need to pay tax to the French revenue first using their rules. THEN you figure out what you owe to the Irish Revenue and use the interest as a tax break. THEN you use the double tax agreement to figure out your actual liability here.

I guess if you're mortgage was taken out in France you may be in luck if they have similar rules to here, but then you couldn't use it to reduce your Irish tax liability.
 
The good doctor is correct.

You first calculate your french tax you get a deduction for the interest paid even though the interest is paid in ireland. (there is a very useful discussion of this in some earlier posts)
In France you will also be allowed extra deduction not normally available in Ireland like buildingf depreciation and sthe notary fees involved in purchase.

You then calculate the tax other irish rules as if the property was in Ireland. You can again deduct the interest. You are taxable on this amount .

The tax payable in Ireland is the Irish tax calculated less the French tax already paid.

Note you will not be entitled to mortgage interst relief in Ireland. You are entitled only to offset the interest against the rental income.
 
ARCH said:
The good doctor is correct.

You first calculate your french tax you get a deduction for the interest paid even though the interest is paid in ireland. (there is a very useful discussion of this in some earlier posts)
In France you will also be allowed extra deduction not normally available in Ireland like buildingf depreciation and sthe notary fees involved in purchase.

You then calculate the tax other irish rules as if the property was in Ireland. You can again deduct the interest. You are taxable on this amount .

The tax payable in Ireland is the Irish tax calculated less the French tax already paid.

Note you will not be entitled to mortgage interst relief in Ireland. You are entitled only to offset the interest against the rental income.
Click to expand...

Hi there getting really confused about this topic, There are other threads on this forum which state the opposite to this "that you cannot claim Irish interest on a mortgage against French Income Tax on rental income"

Can anyone give the correct position with regards to being able to offset interest on an irish mortage against rental income on a French property.

BTW anyone now any decent French agence immobilier that I could contact re buying in Languedoc region.

Thanks

Dec
 
Hi DecB, am heading there myself in a couple of weeks to possibly buy something in the area. Here are some agency sites I've been browsing:

- friend bought through them and found them to be very professional. This agency also handles the rental of their apartment.

[broken link removed] - based in UK

http://www.beautifulsouth66.com/ - my contact there is Ashley Chaplain (he's English)

[broken link removed]

Also, here you can find English-speaking surveyors and here are English speaking Notaires in that area.

According to the information I have, you can only off-set mortgage interest on a French mortgage against rental income in France. I haven't done any more research into it as we are not availing of a mortgage to buy.
 
Hi - I think this is the thread referred to by ARCH.

Basically, it starts by discussing the difficulties some people had in claiming relief in France using an Irish Mortgage. Read down the thread, and you will see how one poster, oscar, established (apparently definitively) than you can.
 
delgirl said:
According to the information I have, you can only off-set mortgage interest on a French mortgage against rental income in France. I haven't done any more research into it as we are not availing of a mortgage to buy.
Click to expand...


To be more correct you can only offset mortgage interest used to buy a foreign property against the rental income from the foreign property. I think you should be able to offset foreign rental profits against foreign rental losses of different countries.

You definitely can not offset a foreign rental loss against an Irish property rental profit or vice vearsa as Irish revenue treat Irish rental income a nd foreign rental income as different types(cases) of income.

I refer only to the tax position in Ireland. I know nothing about French Tax.
 
Not trying to be pedantic but .......

If the French rental income is 8000 and the loan interest on the "irish" loan used to buy the French property is 5000, does he declare 3000 to the French Revenue and pay French tax on tax?

If so..........what does he show as rental profit to the irish revenue.....8000 or 3000. 8000 at 42% marginal rate could be steep allowing for the fact that he will get a credit here for the bit of French tax paid.
 
In each country, you declare the income minus the allowable (in that country) expenses.

So, in France you then pay the tax due on a French Tax basis.
In Ireland, you compute the tax due on an Irish Tax basis, and deduct the tax already paid in France.

The income declared will be the same in both cases - but the deductibles and tax rates will differ.

(this assumes the Irish tax is higher - if lower, you have no liability)
 
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