Hi Stella. We are working towards that but it’s quite an extreme environment at 810 metres above sea level. We have had to gut the house and redo everything even after months and months we are not ready. Today I have been diagnosed with a hernia which needs surgery, but if I have it no heavy work for three to four months!! Just not possible with a renovation…which in essence is varying degrees of heavy work!!
You are so right Billy. The notaires fees and agency fees (which were halved) amounted to €13,500 of dead money. It’s such a bad state of affairs because the notaires get a couple of thousand euros for their work in handling the sale and the state gets the rest in tax!! For what reason exactly?
If they really want to see the housing stock improved and renovated in France then the country needs a President with the guts to address this. Taxing people so highly for buying a wreck of a house, it’s just plain madness! They don’t talk about this stuff on ‘A Place in The Sun’!!
If you live in it, it is your résidence principale, that’s just how it works. They were saying on Inter yesterday morning that property isn’t moving at the moment because people are unwilling to drop their price - I think you should go and see a notaire.
That’s a foreign programme aimed (unfortunately) at people keen to live in Fantasyland. If you ask French people they won’t sing the same tune.
4 Likes
I had to proove the existance of proper invoices when I got a phone call 12 hours before signing the acte de vent and leaving the region. The notaire had omitted to declare something on the paperwork and needed proof the work done was legitimate or I would have to pay something in the region of €8k taxes. Luckily all my legit invoices added up to over €40k and the amount he was looking for to cancel any charges was around €21k but I was warned I could have to produce these invoices if they were called for.
Well yes it does. A lot of people in France rent houses rather than buy them and so they pay tax foncière like any owner and the property is their maison principal. If you buy an uninhabitable wreck alongside that you can get exonerated from taxe d’hab even tho’ a second property, and the taxe foncière should also be low because of its condition.
However if you then declare the wreck as your maison principal then any other property you own or rent will be a maison secondaire. And you will have to pay taxe foncière and full taxe d’hab.
So yes if you then sell the wreck you will be exonerated from capital gains tax, but you may find that this is not the best option financially because of having to pay the extra tax d’hab on the rental property. Would the potential capital gain be enough to make this worth while?
It does seem that as spring is on its way the best plan might be to work out how you can make a section of your wreck habitable so you can give up the rental property and move in. And then look seriously at what you can achieve in say 12 months to work out whether best to sell as it is during this year, or try to finish more so you can realise your dream or sell perhaps with a better return.
You sounds as if you are feeling rather trapped, so trying to decide deadlines and decision points might help you see a clearer way forward. It sounds like a difficult situation, so sympathy,
(We are at 700m and I was here the winter the roof was redone. I had tarpaulin for a roof and one electric radiator, so I do know how cold renovation can be.)
4 Likes
I sold a house in France before I left the UK. I purchased it years ago with a view to renovating it but when I did the sums before moving, it just didn’t stack up as it was large and would have been an absolute moneypit. I sold to a guy who did all the renovation work himself, and there was some heavy work to do. He managed it by living in the house in a tent on one of the floors. Not something I’d entertain, but it worked for him, and he was slightly younger than me.I’ve still got one other house that needs renovating and now wondering what to do with that, as life is indeed too short, and really don’t now want to be spending my time slaving away over that, or managing the renovation if I employed others.
Net, if I was the OP I would ask myself why I’m doing it, the renovation that is. Is it because you’ve found the house of your dreams where you want to now live and enjoy life, or is it simply a commercial venture to make money. If it’s the latter, I think it’s a relatively clinical excercise to do the sums and to see if actually now stacks up or not. If it doesn’t, then you’re being a busy fool for someone else’s gain unfortunately. If it’s the place you want to live, then I would say it’s again a matter of calculating how much it’ll cost to complete and understanding if you can basically afford it. I don’t wish this to be too blunt, but wanted to be clear, as I’ve seen many folks over the years get carried away with renovation work, seemingly leaving the rational part of their brain at the front door!
5 Likes
Unfortunately you seem to have set off from the assumption that buying a wreck and doing it up yourself is a normal thing in France, and the French government should encourage it. But outside of A Place in the Sun it is not really a normal thing and the government does not encourage DIY renovations, that is why it has all kinds of incentives for householders to use registered artisans.
5 Likes
This might be of help to the original poster if French capital gains tax is a concern.
I’ve been examining the form you have to file in France if you realise a capital gain on a property. It’s form 2048 IMM SD and I’ve been studying the guidance note, specifically the section that begins: “Sont *dispensées de déposer une déclaration no. 2048-IMM-SD…”
According to the impots gouv.fr site:
"Première cession d’un logement autre que la résidence principale
La plus-value que vous réalisez lors de la première cession d’un logement autre que la résidence principale est exonérée sous réserve du respect des conditions suivantes :
- vous n’avez pas été propriétaire de votre résidence principale, directement ou par personne interposée, au cours des quatre années précédant la cession ;
- vous procédez au remploi du prix de cession, dans un délai de vingt-quatre mois à compter de la cession, pour l’acquisition ou la construction d’un logement affecté, dès son achèvement ou son acquisition si elle est postérieure, à votre habitation principale."
So since the OP has been renting his primary residence, he should be able to sell his wreck without incurring CGT provided he uses the proceeds of the sale to buy a primary residence within 2 years. Or - if he only uses some of the money to buy a primary residence - there would be no CGT on that portion of the proceeds.
5 Likes
Out of interest have you spoken to any agents to get an idea of value?
2 Likes
Yes and buying acres of land they physically cannot manage nor would ever use thus taking up all their valuable time. People seem to think it makes you look wealthy buying lots of land but ask yourself why the place is for sale and what the previous owner did with it all? Same for houses, the bigger the better in the eyes of others but not for the owners who have to regularly maintain, heat and furnish etc. All OK when young with a family but getting older and poorer because the pension has taken over the wage earning is not good.
3 Likes
Indeed. We bought an MS in Deux Sévres when were much younger with a view to renovating a large barn with attached land and selling the main house and field. In the end, when it came to it, we really couldn’t face going through that years later and so sold up and bought a modern single story house with a large enough garden to grow produce, have a few flower beds, plant a few fruit trees and have room to park the car. Just enough, but not too much to maintain. We certainly did the right thing for us.
1 Like
Hi Paul
Sorry to hear of your predicament and I hope you can find a solution. I don’t know much about GGT, but I’d get a valuation first before worrying about it too much. As others have said, try to make it basically habitable as quickly as you can to make it your primary residence. Maybe then you will feel more comfortable with the situation and decide to stay (we sold our moulin last year and moved to lower normandy ). Good luck.
2 Likes
Thinking long term, one factor to bear in mind is that if you do decide to get the place habitable and genuinely live there, then a couple of years down the line you should hopefully be able to apply for home improvement grants to further improve the condition of the property at no or minimal cost to yourselves. What is available on these schemes may well have changed by then but currently there are schemes for insulation and various other energy efficiency measures and incentives. This is how the French government is supporting improvements to the housing stock. But of course these grants are only available for résidences principales and they require solid proof of this. Also read the small print because for some schemes the money is repayable if it ceases to be your résidence principale within x years.
With respect if you decide to stick with it I think you would do yourself a favour by taking the trouble to find out how France works and work with it, rather than complain that it is all wrong because it makes it hard do things your way. You do not say how long you have been in France but the concept of résidence principale and résidence secondaire is very basic and quite important administratively. Did you (and your Brit friends that you rent from) not complete your property declaration earlier this year?Also the legal obligation for major building works to be covered by insurance for 10 years after completion no matter who carried them out, is something thatyou need to understand before undertaking any gros oeuvres yourself. The implications of selling a DIY-renovated house if there is any major work not covered by insurance is perhaps another factor to be considered when deciding on your way forward. To me the best options seem either you offload it as a wreck and take no responsibility for any work done, or you commit to it in the long term, live there, make use of the government schemes to get it it up to standard, and generally live the dream and enjoy your retirement there. Taking the in between route and selling a partial renovation seems to me fraught with risk.
I do not understand this at all. If you rent a house you are not the owner and do not pay foncière. I must be reading it wrong I think.
Me too. We let nine apartments and two cottages, we are responsible for the TF on all of them plus our own habitation, a figure, this year, of just shy of 10,000€.
My son rented and only had to pay Habitation which is levied against income of the person living in the property. The Foncières was paid by the landlord for the property which consisted of 6 appartments whilst his tenants paid their own habitation. I remember this well because my son was 25 and to start submitting his own tax return even though he was a student but worked weekends and holidays and he had to go see the Impots one time as they wanted proof of student bourses etc. Now I do wonder if people who rent via social housing schemes have to pay their own Foncières as they are usually long term renters and not students who stay for a couple of years and deal with private landlords.
You are right, senior moment! But still stick to point that flipping residence to save CGT may not be best financial option.
(Mind you, outside rent controlled areas the landlord will factor their costs into the rent)
I know what you are saying but the plethora of DIY stores in France somewhat argues against that point of view.
The position does seem a bit inconsistent though - DIY possible, though there are disincentives such as lack of décennale insurances for any prospective purchaser, renovation for profit by an individual not using the property as principal residence heavily taxed with high CGT and social charges and no allowance for materials bought. There doesn’t seem to be any inherent difference in the two situations to me. I guess the real objective for the government is to push anyone who is doing this towards having a properly registered business to do so.
1 Like
Yes I agree about flipping residence. Apart from anything else the fisc is on the lookout for this ruse and does not draw a line under the potential CGT liability at the time of the sale. I suspect properties that conveniently switch status are a red flag and they can come back with a bill several years later if in retrospect it looks like the change in residence was not genuine. If for example you had had two properties against your name on the biens immobiliers for a number of years with rented property A as your primary residence, then you flip primary residence in year n you flip your primary residence to owned property B, then in year n+1 you sell B and revert your primary residence to A, I see a very high probability that the fisc would see this as an attempt to avoid CGT, and they would issue a bill retrospectively when you might not be expecting it. To be safe I think you would need to stop renting property A at the point when you switch residence, have property B as your only property for at least a year, and after the sale move to a new address and not back to property A.
1 Like
Not really.
Apart from anything else probably every artisan has a business account with several of the main DIY stores, Leroy Merlin etc, and probably a large percentage of these stores’ income comes from professionals
But, there is no problem with anyone doing DIY on the home that you live in and intend to continue to live in for the foreseeable future, or for a second home that has been in the family for generations and that you have no intention of selling. Of course people do DIY on their homes, and after 10 years it is irrelevant whether the work was ever guaranteed or not. If Paul intends to stay there then he need not worry about it. But if he intends to sell within 10 years of completion then it will be an issue.
I see a world of difference between doing work on a house you will continue to own, in which you did it for your own pleasure not for profit and you take full responsibility for the work and the consequences if you bodged it and it needs redoing. That is nobody’s business but your own. And on the other hand doing a house up for profit, putting it on the market and selling a potentially bodged property to a new owner who without the guarantees will have to sort out any consequences. That is a consumer protection issue.
But I was also thinking of the home improvement schemes where the grants are only available if you use registered installers. Again the government wants these improvements to be carried out professionally so as to be effective.
How well it works in practice is another question of course but I was picking up Paul’s comment that
France is doing things to address the energy efficiency/decent housing issue, but they are doing it through home improvement schemes and crédits d’impôt, in a way that helps taxpayers to improve their living conditions and at the same time supports the artisan sector, and not by encouraging every man, woman and dog to turn into amateur DIYers and property speculators. They specifically do not want this.
1 Like