Hello , I’m getting married in France soon to my partner. But I’m a property owner in Australia I still have two years left to sell before im slugged CGT tax when I sell . I assume I’ll become a tax resident of France when I relocate permanently? ( Does this also means that my property in Australia is not my main residence anymore? Affecting me being exempt from Australian cgt charges) Im lost as to what is the OVERALL smartest thing to do tax wise etc sell the property before I get married so I’m not charged by France or wait two more years and let it increase in value and then sell . Is there some kind of beginning period where I’m exempt of some french charges until I become a permanent resident?
Hope this able to be understood. As I said I’m quite lost at this stage .
Welcome! It’s hard to see how you could improve on the global situation - tax wise - if you sell when Australian resident provided you’re exempt from CGT there due to the property being your main residence. France will not tax that gain if the main residence is sold before moving there.
Hi
Hopefully someone with more detailed knowledge of Franco-Australian tax arrangements will be along soon but overall, I would think that it’s more tax efficient to sell your primary residence before you move to France.
Think hard though about the long-term implications of no longer having a base in Australia. And the possibility that, should you wish to return one day, you may find yourself priced out of the market (property in France doesn’t appreciate at anything like the same rate).
I have a friend here who keeps a house in Australia and rents it out. He has a good agent and it’s all been surprisingly painless.
Yes I’m also aware of all your points and that’s another reason the whole thing is scary!
My house is rented now to good tenants but I think once I become a tax resident of France they will want a chunk no?
Although I don’t plan to ever return to Australia I’ve been dreaming of making my life in France a reality for decades and i think I need to do something drastic to get started.
Would like to still have a common sense approach though. Thanks Helen.
It’s a chunk of the gain, so you’ve still made money, no? If you think the house will continue to gain value (which, of course, is not guaranteed) then you’re still making money just not quite as much.
My suggestion would be to not let greed cause you weeks and months of angst as you’re going to have enough on your plate just by changing country.
Ah. I’d understood he was asking whether France would tax his rental income.
I THINK the rental income is taxable only in Australia. I’ll email my Australian friend today but I’m pretty sure- although he declares the Australian rent in France and perhaps it has the potential to push his other income into a higher tax bracket - it is taxed only in Australia.
You need to look up whether there is a Franco-australian tax treaty. That should explain where things like rental income are taxed, and it may well be in Australia only as it relates to immovable assets. (It would still have to be declared here).
As for cgt, have you worked exactly what the tax would be including reductions for costs incurred and any discounts that may exist for it being rented etc? You may find having a precise figure helps you decide.
I don’t think I’m being ‘greedy’ I could sell i could not sell I’m not trying to make money I’m just trying to transition without being screwed over. I was trying to understand what’s the smartest things to do before I became as a resident just in case I found something out later and regretted it.
Just got a reply from my Tasmanian. Their Australian rental income is taxable only in Australia.
It does, however, have to be declared in the French tax return.
I wouldn’t sell and I’d accept that my taxea in France will be a bit higher because of the indirect effect of the rental money, whilst taxed only in Oz, pushing me into a higher tax bracket in France
That kind of implies a lack of intention to sell at all, whilst I am still taxable in France though but as a plan I think that makes sense.
There are some more complicated things you could do but you’d need professional advice and the results would still to a large extent depend on how things go in the future - which with or without advice no one can be sure of so the above is my best guess.
Sell your current house, buy a small bolt-hole in Australia to be rented out and put the rest of the proceeds of the house sale into your move to France?
