We are planning to retire and have decided to sell our house which we currently live in and run as a b&b and gite business. We spoke to a notaire and an accountant but this has not really clarified the best process to follow with regard to making the sale the most tax effective.
We have been told to ‘cease the business prior to selling’ in order to minimalise CGT, but if this is so, then for how long prior to sale must this be done?. Also we have been told 'not to sell the property as a business ’ - but what does that actually mean !
I am hoping that some here have already been through this process and can offer some helpful information.
regards
geoff
How interesting. I can’t help you as we are probably 5-10 years off moving, but curious about it as one day we will be in your position. So very curious about CGT. I, perhaps naively, assumed that a gite that was part of your main home with a turnover within the BIC threshold would be exempt from CGT? But sounds as if this is not the case - did the notaire explain at all?
And as for ceasing to trade before selling, what effect would that have on the sale price? If you could be sure to sell within a short period of time then maybe sensible, but it could be much longer. If I were going to buy a ready made gite complex I’d want to know recent business figures. So if several years since it traded it would be a bit odd? I guess it depends on the size of the CGT liability…for us it would be insignificant as I really can’t imagine we’d be selling for much of profit once the renovation costs have been factored in.
There are a couple of specialised agents who deal solely with existing and potential gites. Perhaps they would be a useful source on info.
Do continue to post, as this is interesting!
There are odd rules regarding CGT and gites, friends of ours sold their complex a couple of years ago and had to pay CGT on the gites that were not physically connected and accessible to their main residence.
I guess they’re just regarded as maison secondaire which is where the CGT liability arises from…
and then to the business aspect, CGT would be payable on the perceived profit from selling the business:
Capital gains tax in France is called impôt sur les plus values and is a tax payable on the sale of land or buildings, on shares, and certain other personal property, subject to any exemptions, allowances and deductions that are available.
If you have a single taxe fonc/d’hab it strikes me as unfair then to say they are separate properties?
I thought Plus Value was only payable on physical property, ie on the actual buildings of the gite. So why does it make a difference is the business is running or not? Obviously turnover can make a difference to sale price, but how does that translate to capital gain I wonder. How do you calculate the value of that business above and beyond the physical property? Is it things like goodwill which are gone in an instant…
Not something I’ve thought much about but fascinated to find out in case in means we change what we do a bit over next 5 -10 years.
Do you know the website / forum for gite and B&B owners laymyhat.com ? There is a section within it specifically for France. I would have thought some people there would be able to help you.
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yes, I am finding the rules a little bit 'wooley’however thanks for all the input. I will try the forum Sue mentions.
geoff
If you had to renovate or upgrade your property, then as long as you have the receipts, this work will be offset against CGT.
normally though, this is only for work undertaken by proffessionals - not for work done youreself - like most of our renovation
well to those who replied - thanks. But I must say, surprisingly there were very few respondants.
I guess we’re all here to stay, and not even planning to “retire”. And with the pound being what it is we’re certainly not giving up our euro income!
Coincidently just found this, which implies that closing business is not more sensible if you are LMP - which makes the advice you got quite odd.