Need advice on our situation please

Property & Home
61

Hi Paul, if I recall correctly, the fisc doesn’t actually mandate a required legal amount of time for the property to be deemed residence principale. You need to be living there on december 31st and declare it as your residence principale.

So technically, you could move there, live in it for three months and then sell it on. You would most likely get an inspection from the fisc into your transaction, to prove that you did live there and that it is your principal residence, but might be worth the hassle. Basically it would have to be done in good faith. You would have to move all your accounts/mail there, prove that you have lived there, which is usually done by showing your water and electricity bills. They will check for normal consumption patterns to prove that you were actually in the house and not elswhere.

https://www.pap.fr/vendeur/taxe-plus-value/est-on-exonere-de-plus-value-lors-de-la-vente-d-une-residence-principale/a23540

" Pendant combien de temps faut-il habiter la résidence principale avant la vente ?

Nombreux sont ceux qui évoquent à tort des délais de 6 mois, 8 mois, voire un an d’occupation à titre de résidence principale pour bénéficier de l’exonération des plus-values immobilières. Il n’en est rien, Aucune durée minimale d’occupation n’est prévue dans la loi. Mais attention, une revente après une courte durée d’occupation vous attirera un regard attentif sur votre situation par l’administration fiscale."

1 Like
62

But it assumes all this is necessary because there has been a capital gain?

1 Like
63

Place in the Sun has been mentioned and this is something which always makes me smile as the happy couple are offered a holiday home with 4+ acres of land.

We have a superficie of 2880m2 - less the house and gravel call it 0.25ha - we could *just* manage that on our own but the first day of any visit (and sometimes more) was spent mowing. We now have someone who does that and it’s a bit easier to manage but we’re still playing catch up from Covid and in some areas such as getting the gravel weed free again not making much progress.

In some ways it was the perfect size for us - just  too much to manage. Any larger and we’d have had no chance, any smaller and we might have started hankering for more.

Maybe - I think people who move to France from the UK are just as likely to want to settle, however the model of buy a place, do it up, sell it and live in it while you do so is fairly common in the UK and can be a viable way of earning a living.

As I said, and as you intimate it’s probably not a terribly French way of doing things - and there are considerable disincentives to trying.

I don’t think I agree with your observation. In fact I was the first to mention lack of guarantees as a potential pitfall for the OP.

Can this be waived? or simply not offered and the purchaser gets to choose how much he thinks it affects the valuation?

This has been suggested - both by actually making it Paul’s primary residence and as you suggest by simply designating it so, but living in the rental.

The problem with the latter suggestion is that the fisc might say "hang on, you were living at the rental, now you claim that you are living at the renovation - oh, you now sold the renovation but kept on at the rental. Perhaps this was just a ruse to avoid CGT and Social Charges all along.

It possibly would have worked if it had been set up that way from square one, not sure.

I think Paul needs to dispassionately weigh up and do the sums for each option, then decide what he wants to do, however it seems that “pay artisans” and “complete the work himself” are both fraught with difficulties.

64

Why the need to resort to ruses to avoid CGT?
As I pointed out earlier, the impôts gouv.fr site states he can sell his secondary-residence wreck without incurring CGT provided

  1. he hasn’t owned his résidence principale in the 4 years running up to the sale (which is the case, right? He rents.) and
  2. he uses the proceeds from the sale of the wreck to buy a property which then becomes his primary residence within 2 years of the sale.

Here’s the extract again:

"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."
4 Likes
65

Thanks @Helenochka - missed your post first time around.

That seems straightforward, “all” it remains is for Paul to sell his restoration property, if that is indeed what he wishes.

66

As an aside, the way this exemption is handled strikes me as slightly odd. The guidance note for reporting CGT says you don’t have to file the form (2048 IMM SD) if you meet the conditions I mentioned.
But obviously no one can know for sure in advance whether they’ll manage to sell up and buy a new primary residence within the deadline.
The UK system of making you, for example, pay extra stamp duty at the time of sale and then - if you do manage to buy another primary residence by the deadline - claiming back the extra you paid seems more logical.

1 Like
67

@Paul_Lewis

Well, this thread has trundled through some interesting stuff…

Once you’ve taken it all in, I suggest you make an appointment with your local Notaire (perhaps the one you might well be using in any future sale of your property…)

Explain your situation (health etc) and ask his advice on what taxes /deductions etc you "might be charged " against the Sold Price… if you do sell, Now…

No matter what we all say on this forum… it will be up to a Notaire at Sale time, to deduct what he/she deems appropriate… he will judge your situation…and you wouldn’t want any nasty surprises… :wink:

(Having been a “fly on the wall” in a number of Notaires’ offices… I can state that some
Brits have been surprised (angry even) with a variety of issues …

Best to be confident, know it all up-front “from the horse’s mouth”… and sleep-easy.

good luck

1 Like
68

Thats not the whole story. The profit/gain will depend on who has done the work. You can only offset costs of renovation for the work carried out by French companys any work carried out by yourself or freinds will not be allowed as dedutable for tax purposes. We did a similar thing but we lived in a big caravan in the garden.

69

Unfortunately that is not really true. If it was, there would be no challenges, no need for legal definitions of principal residence, no need for legal precedents on what is acceptable as proof and what isn’t, but in fact a google search will through up plenty of all of this. For instance this case about CGT which has some similarities with the situation here and which was in fact won by the homeowner but just look at what he had to provide as proof in order to convince the judge -
" En vue de démontrer que l’appartement vendu constituait bien sa résidence principale, M. A soutient qu’il a occupé le bien depuis 18 mois, et non 11 mois comme l’affirme le fisc. Pour attester de la durée d’occupation du bien, le vendeur a fourni des factures d’éléctricité faisant état d’une consommation normale, deux courriers d’opérateurs téléphoniques portant sur l’installation d’une ligne ADSL et d’un accès internet haut débit, ainsi qu’un formulaire de location d’un emplacement de parking . Il souligne également qu’il a acheté des meubles pour aménager les lieux." In the absence of proof, just saying it was his principal residence would not have been enough.

Legal definition IF - TH - Base d'imposition - Abattements - Champ d'application | bofip.impots.gouv.fr

1 Like
70

Apparently most lawyers will tell you it cannot be waived. The argument is that the 10 year guarantee is codified in French law and it applies to everyone and everything that is subject to French law. Two individuals cannot simply sign a clause stating that in their case French law does not apply.

However many notaires will insert a clause saying that the buyer has agreed to waive his rights. They will justify it by saying that the buyer is not disapplying the law that gives him those rights but he is undertaking not to excercise the rights, which is of course his privilege.

To which a lawyer may respond that French law takes precedence and if challenged in court, this clause would be declared “non écrit”.

So you pays your money and you takes your choice. It seems to me that if you do use this clause you basically have to trust that your purchaser is in good faith, and having promised not to make a claim, he will not go back on it and contest the clause.

That is certainly the best solution if Paul is indeed going to purchase buy another property and move into it within 2 years. .

71

No not yet. Been trying to get the house sorted to a certain standard.

72

At the moment I believe we are paying a much reduced tax fonciere on the property as it is listed as unihabited (uninhabitable). We paid €182 towards the end of 2023. Given the house is 160m2 over two levels and with four hectares of land that can’t be the full amount?

Regarding your reply, are you sure you are correct? Can I state it is my principal residence for tax reasons even when it is registered with the department as unihabited?

73

We have a small caravan on the land, which we stay in during the warmer months. Well I stay more often as my wife has a full time home based job working online so needs the fibre broadband at our rental.

I don’t know how many of you know the Plateau Millevaches? It’s pretty high up! The house is at 810 metres asl. We can have snow as late as May and as Early as October. Things like the water tank for the caravan are frequently frozen, even the chemical loo (urrgh)!!

Our last renovation in Charente (2014-16) we lived in a caravan at first, but we were younger and keener and a much milder climate.

I didn’t want to do another renovation at all but everything we viewed in this area within our €180k budget was terribly renovated, extremely dated or just not right.

Hence we are were we are!!

1 Like
74

Lots of people renovate their own houses in France including the French. I am in a couple of Facebook groups 'Renovation Pertinente’and ‘Renovating in France’ There are thousands of people in these groups all doing major renovation works. I am not some just off the ferry bodger!! I am working to a very high standard whilst having technical advice from an eco building consultant. Just to clarify.

When we viewed houses before buying this one, many of the so called “renovated” properties were absolute nightmares and completely energy inefficient. I am talking about houses in the €150 to 200k bracket, not wrecks.

75

We have a small caravan on site, which we use when the weather is kinder. Logsitically if we left our rental we would have nowhere to store all our possessions as our renovation project has no barns or outbuildings. Storing in the house itself would not be practical as yet, but I am working towards that point.

Imagine a house 82 metres in area on the ground floor and about 90 m2 on the second floor, all open plan. That is what we have. We are yet to install the second level floorboards, but once done it will be easier to store stuff in the house.

76

Yes, could be a capital loss!!

1 Like
77

Most of our land is woodland and has been untouched for decades. Only around 3000m2 around the house is meadow/garden as such.

78

Exactly! Yet people are just on the gain narrative.
Seen plenty buy and loose.
As they say " France is a great place to make a small fortune, out of a large one"

79

For our last French renovation we made €60,000, but were not looking to make money. We just didn’t settle in the area so came over to Correze. We lived in that house whilst we did it, but this one has not been possible for logistical reasons. When we renovated in Charente we had nearly all our stuff still in the UK.

Now we are renting nearly all our stuff is over from the UK and in the rental house. If we moved out into our wreck there would be nowhere to put anything!!

On the wreck we have had to remove the complete second floor beams and redo (82m2). You can’t live in amongst those conditions. Once we have boarded the second floor framework and the attic floor we will have gained another 160m2 of floor space, so storage will be easier. Notwithstanding we still have the roof to redo (but for now it’s not leaking!)

80

That would be the plan as we intend to stay in France. Would buy a habitable house next time though.