We live in North Correze on the Plateau Millevaches, We are renting a property near Chamberet from some British friends. In late 2020 we purchased a renovation project on the heights of the plateau in Bonnefond commune.
This project is the only house we own. We have no UK property and rent the other house in Chamberet. This is from necessity as our house it not yet habitable.
What I would like to know is our situation on selling? If we did sell and it is our only house then if we made any profit then it would NOT be liable to tax by the French government? Is this correct?
I have read that maison secondaires are liable to around 37% tax on any profit, but as we are renting the other house how does this work? What are the rules? We really cannot afford to take a hit on any profit (if any). However given the huge work we have done so far we would hope to sell it for more than we paid in 2020 (including fees/notaires).
Can anyone advise on this?
Be interested to hear people’s thoughts. Kind regards Paul
I think the problem will be that it is not your principal residence so will be treated as an asset (you might not think of it in those terms). For all the taxman knows it was always a project that you intended to sell for profit and not to live in.
Possibly you will be able to get some of the work you have done, or at least materials credited to the value of the property.
I’m sure others will offer more (and probably more correct) advise but I think you need to discuss the situation with either a Notaire or tax adviser (or both).
The house in which actually you live, no matter whether bought or rented, is your primary residence and anything else is a secondary residence for tax purposes.
That is correct as I had to show official artisan receipts for work done on my house when I sold it in 2021 to confirm the price it was sold at and to satisfy the impĂ´ts. DIY and material invoices are not accepted, only those with official paperwork and TVA reg number.
is there any way you can live/camp inside the property itself for 12 months???
If it is your residence for a year there is no capital gain when you sell… but you need to do this properly, no faking…
this worked for Brits a few years ago, when they wanted to sell their gite… they moved out of their house and into the gite… changing their address for bills/bank etc etc…
No more so I guess than any other tax rules. Frustrating that it penalises DIY restoration to an extent in that you can only really restore something in which you can actually live.
Its to stop people making money basically from buying and flipping. I owned my house for 32 years so was well outside the tax band but because the profit was quite high, I had to proove the work was done officially and they can still ask to see the invoices even now, two years later on if they wish. Unfortunately it is not your main tax residence so classed as a maison secondaire currently which does attract all the main taxes. Personally I would pay to see a Notaire and get some advice as to what to do to limit your liability if you want to sell and remember the rules keep changing too.
Caravan yes. I remember Brittany in the 90’s, nearly every brit owned wreck had a caravan parked outside in which the owners lived whilst they did the place up. Unfortunately some found this a miserable existance especially with kids but put up with it to establish residential rights etc.
I can believe it but it makes no sense - there’s no liability for tax when selling a property you have held for more than 30 years, so why quibble about whether you had any work done by properly registered artisans.
The risk, presumably, would be that the fisc - seeing he was still in rented accommodation - would consider it a ruse to avoid paying tax and be not amused in the way only the tax authorities (who are generally known for lacking a sense of humour about such things - whichever jurisdiction we’re talking about) can.
This would be for any guarantees that were still valid i.e. professional works within 10 years of the charge of ownership.
I often get contacted by notaires asking for copy invoices & assurance details when one of my previous clients is selling, as many don’t seem to be able to find their own copies.
You’d think that (in some cases) 5 figure sums would make them focus on keeping such info
I don’t think you can “just make it your principal residence”. As I understand it, you need to demonstrate that it’s your centre of affairs e.g. through your tax returns, etc. Presumably the OP’s current tax returns are linked to the rental and there would need to be an evidenced change for at least 12 months.
If the building project becomes his principal home he will then have to pay taxe d’hab on his rental as it is a second home - albeit a rented one. Which will be much more that any taxe d’hab he pays on building project (if any as uninhabitable).
It seems a crazy rule. Do they expect everybody who buys an uninhabitable wreck to live on site in a caravan? Surely renting a house should not count as one of your properties? We chose our part of France (Plateau Millevaches - couldn’t afford Ariege) because of climate change and the fact that here in Chamberet (450 metres asl) in 2019 we had crazy temperatures, but they were much worse elsewhere influenced our decision to buy higher up. Our project is situated at 810 metres asl and surrounded by cooling and shading woodland. After the droughts and intense heat of 2019 and other years we thought it made sense. The pay off is that the winters are cold and often snowy. Don’t mind this for a house but for a caravan you have to be a masochist!! Can easily drop to minus 15 or lower!
