@KarenLot i would love professional advice of some kind at some point. I never know who to go to for this specific advice!
Thank you for your thoughts. This sounds worth considering for sure at some point.
@Arjen I am south not south east. I guess there is a lot that can change any part of the world right now, its all getting a bit weird everywhere!
Superior capability wise maybe, but selfish more and that is the issue with most humans unfortunately. Especially, those in power.
@Gareth2022 thats good news for once lol.
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@KarenLot I wish I had this much general knowledge about it all. It really pays to know what options are out there.
If youāre talking about IHT as opposed to CGT, I think the UK allowances have not changed recently and technically children can inherit up to Ā£1 million in the UK before they have to pay tax. As far as I know, any unused nil -rate band or residence nil -rate band can still be transferred to the surviving spouse if one member of a married couple dies.
Yes it will for France says the former principal residence property must be left empty, not let.
However, if I recall, if the funds are used to buy a new principal residence within 3(?) years, the French CGT is refunded for the part used to buy the new property.
There was a bit of a debate about whether strictly this all applies to UK property as French tax law doesnāt seem to explicitly state for foreign propertiesā¦ (I think)
The clue is in the name I donāt believe the resident nil rate band applies to non residents, so you have Ā£650k the elephant in the room is bringing UK pensions into the scope of IHT from 2027 and RR aināt finished yet!
Why do you think the residence nil-rate band doesnāt apply to people living outside the UK? Iāve always understood that my Mum inherited my Dadās unused residence nil-rate band (plus some of his ordinary nil-rate band). And that that allowance will be available to my brother and me when Mum dies. Unless sheās spent it all, of course, which sheās perfectly entitled to do.
Thereās no clue in the name. āResidenceā (not āresidentā) nil-rate band refers to the allowance which applies purely to the deceased personās main home. Itās not transferable to any other assets they may leave.
Itās not a reference to where the deceased person or their heirs are āresidentā.
Except if the children are product of recomposed family the may want to keep as much as possible in the UK to hsve testamentary freedom
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Having done holiday rentals for some time, I can give you a few rough figures. The income generated per year would be 4- 5% of the value of the property. Provided you opt for non-professional status and the properties are classified, the tax authorities will knock 50% off that, and tax you on the rest, but you will only be allowed to rent for 120 days per year On top of that is the cost of advertising, tax fonciere, tax habitation, electricity, water, insurance, gas, and maintenance. As a guide, our property earns about 25,000 euro, of which we pay 6000 costs and about 2000 tax.
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@Peter_Whitfield thank you for this. That is a great breakdown of figures.
What would we have to do to rent more than 120 days per year?
Hi, Thought that might be useful. The 120 day rule (90 days in some areas!) applies to a primary home, i.e the one you normally live in. For secondary homes, there is no limit, but you would have to pay taxe habitation on them (you only pay taxe fonciere on your primary homeĀ°. To stay ānon-professionnelleā, there is an upper income limit (70, 000?). Above that, you are deemed āprofessionalā, and instead of the 50% forfait, you have to declare your actual expenses, which, I believe, can include mortgage payments, but you should check that out. Any other queries, just ask.
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Everything depends on your status and the area you are in. The is enormous pressure in some zones - to the extent that the limit has been dropped from 120 to 90 days. And you actually need permission to do so, not just the simple registration at Marie. Some maries are refusing. A lot changed this year!
To rent all year in many places you now have to be professional unless really a tiny side hustle, get planning permission for change of use, and pay a business tax. The threshold has been dropped! And operate regime rƩel. This is what we do and it works for us as can offset depreciation. Also as we are in mountains so high heating costs.
The world of seasonal rentals is very French, with all sorts of twists and turns. So you need to map out your precise and specific situation and test that rather than assume a generic solution will work.
(We get 10% return on investment - but only as have been doing it a long time I guess)
This shows the situation last year - so not accurate but gives the idea
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Iād stick with the uk rental , I get 9 % and havenāt increased rent for a couple of years as tenants are great as is the full management I pay for. I could sell and do the rentals here in France but for me too many things to sort compared to uk and for less income.
The rich keep debts going thatās how they pay so little tax compared to rest of us. Borrow on asset , keep doing it and tax is kept low .
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Also ā¦ā¦ saw this in a search ā¦ā¦. non-UK resident and need to get a retrospective valuation of a UK house as at 5 April 2015. This is because for CGT purposes, the UK tax law says I can use the value of the house as at 5 April 2015 as my āacquisition costā, instead of the cost I paid for the house in 2003.*
I did this , I bought property in in 2008 and got it revalued for CGT. Maybe itās something you should look into if the uk house was purchased before 2015?
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@Welshgirl ours was purchased inly 5 years ago.
I do think keeping the UK kind of makes more sense money wise, but i have to say that my agency is awful and it stresses me out at times.
The big plus point of reinvestment here in south of france is we would have no mortgage for the first flat while figured out the landscape of being a landlord here, plus could manage the property myself instead of employing an agent who doesnāt seem to be very competent or polite!
@JaneJones ours would start as a side hustle here with a one bed apartment near the sea.
we would buy the first one outright with money from our house sale and later on buy another one once we decide if its worthwhile and we like it.
UK feels more sensible but i do feel the draw to starting an investment portfolio here. One at a time, step by stepā¦
Its complicated decision.
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@Peter_Whitfield we live in rented in france and will continue to do so long term due to the situation being very convenient. The one we would rent out would be a small apartment near the sea in the south. We would own it outright hopefully.
I havenāt looked into setting up as a professional etc. it is something i need to look into in detail if we go forward.
I think we could make good money here with this one apartment, and then another later onā¦ But the sticking point is giving up the UK house. For a couple of reasons, keeping it feels wiser!
It just drives me mad at times.
Find a better management company, my first was awful , did some research and changed for the better and cheaper!.
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