Tax implications selling our house in UK

Yes, you want to have sold your house while it still qualifies as your principal resident and no capital gains tax to pay. There is a system of tax relief once you have become non-resident, here

BUT, once you are non-resident in UK and tax-resident in France then you have to pay French tax. In France your main residence is also exempt from capital gains tax, and the fisc usually grants a leeway of about a year to allow for it to be sold. I guess renting, rather than buying in France might help that as long as your house is actually on sale.

This is such delicate ground that you do need to take professional advice to be sure where you stand. Capital gains tax here on a second home is 36%…so you don’t want to risk it!

We found out by chance whilst living in France but with our former UK home to sell that (if I remember correctly) whilst avoiding capital gains through tax we would still have been liable to pay social charges. This could have been over 30000 euros. From memory, and it may have changed, length of ownership of the property was a factor but I think there were different rules for tax and social charges liability. So, I’d definitely suggest taking proper advice. We avoided the problem by reverting to living in the UK but length of time away from the UK also had to be taken into account for UK tax purposes. Good luck!

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What are ‘social charges’ in this context Kevin?

A further 17%!!!

If you mean What are they for - they’re a tax by another name. There are two components, CSG and CRDS. CSG stands for general social contributions and the money goes towards funding the health service infrastructure and a quite surprisingly wide range of other social benefits. CRDS goes towards paying off France’s national debt. Levied on most types of income if you live in France, with certain exemptions.

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Introduced as an “exception” that became the rule…

I agree with the suggestions that this is an issue over which it is worth paying for specialist advice.

We have a UK house that we used to live in, but more recently rented.
We took specialist advice before we moved a year ago, and as a result knew that we would be liable for the french equivalent of CGT on this UK house, if we did not sell it within the first year. (Unhappily we have not!).
We would then also be liable for Non Resident CGT to the UK as well, although mitigated by the double taxation treaty.

I worked out the differences. The more valuable the property, the worse it seems is the difference! Selling it before we left would have triggered a fair amount of UK CGT, but allowances took that back down. As a result we will probably pay slightly over twice as much actual tax in France .

Selling it in the next year or two is however somewhat mitigated by tapers on the French tax, which apply if you have owned the property for some years. As I understand it there is a tapered relief on both French CGT and the Social Charges, after the first 6 years of ownership. The taper relief on CGT takes the CGT to zero tax after 22 years of ownership. The taper relief on the Social Charges takes it to zero tax after 30 years!

The bigger issue is if you have carried out improvements since purchase. I suspect Notaries will reluctantly accept bills for works from UK builders who were registered and limited, but not costs of materials etc if not funneled via such a builder. Otherwise, there is I understand an allowance of 15% of the purchase price that can be charged for improvements, provided you have owned the property for more than 5 years.

If the final capital gain liable to French Tax is more than € 50,000, then there is an extra charge on a sliding scale.

So in fact, the longer we keep the UK house before selling it, the better the effects of the taper.

There are details of these %ges and charges at
https://www.service-public.fr/particuliers/vosdroits/F10864#N10150

Now that is useful, thank you!

It never occurred to me that the taper would apply to a property outside France! Or that any allowances for improvement works would even be considered. That could make a big difference. Let’s hope this is an exemption that stays that way for a bit as we have no plans to sell UK flat just yet since occupied by family members.

I gave my share of my late mother’s house to my nieces a while back, and reported it to HMRC within 30 days as required, wasn’t charged CGT on the gain since she died although my sisters were. It wasn’t a very big gain tho’!

Lets hope you live beyond the seven year tax free gift period. :wink:

Yup! :crossed_fingers:t3::crossed_fingers:t3: So stupid, we should have varied her will and done it straight away but none of us were thinking clearly.

Hi John,

Thanks for your last PM -I’m digesting it and will get back to shortly!

Everyone - I’m looking to see if anyone has any further info on this post on French property in which they say on the soccila charges 17.2% CGT sliding scale levy:

If you are a resident of France then the applicable basic tax rate is 36.2%.

This sum comprises capital gains tax at the rate of 19% plus 17.2% social charges.

However, residents in France from the EEA who are not affiliated to the French social security system are now exempt from the social charges, but subject to a ‘solidarity tax’ ( prélèvement de solidarité ) at the rate of 7.5%. This clearly applies to residents who are in receipt of an S1 certificate of health entitlement.

Critically, they point out 0n the next page -
As a result of a change of law in 2019, social charges on those resident in France holding an S1 certificate of health exemption (or similar) were abolished, and replaced by a ‘solidarity tax’ ( prélèvement de solidarité ) at the rate of 7.5%. That gives a combined total rate before allowances of 26.5% of the two taxes.

This change also applies to non-residents living in the EEA who sell their French property, eg second home owners.

However, see our article Social Charges on EEA Non-Residents concerning notaires who are not correctly apply the new rule.

No tapering relief appears to be applied on the solidarity tax.

The link’s below for info…

I haven’t come across this anywhere else - what’s peoples thoughts???

On calculations this would be a gain on the 17.2% rate until the 25th year of the social charges taper.

I’ve become very interested in this today because having received an offer on my flat I’m now thinking of keeping it and letting it out for a few years.

And PS the main home exemption advice for selling the previously main home property abroad within the year of moving seems to have definitely changed that it is only officially for France properties, (Blevins has updated theirs - it’s posted elsewhere) - but local tax offices may (do) continue to allow it.

I am extremely interested in this thread as I finally sold my house in the UK in the middle of last year and paid CGT in the UK for the period in which I was resident in France. I am obviously expecting to sort out some kind of charges here as the tax return cycle is coming up.

I had the house for 23 years and it was my primary residence for all but the last 4 years of that time. It sounds from what has been said before that I ought either to talk to the tax people here or to get specialist advice or both. If anyone can recommend a specialist from their own experience, I would be grateful to know…

Now I’m really worried - looking at some of those links, it seems I should have declared it to the tax people here within a month of sale.

You only need to declare the sale when you submit 2020’s tax return in a few months time.

Hi @AngelaR Angela,

Just to say there’s an exemption -

  • Sale of a home other than the main residence, if you use the sale price to buy or build your main home within 2 years.
    In addition, you must not have owned your main residence in the 4 years preceding the sale.

I presume not owning your main residence means renting. I read it as if you meet the 4 year non-ownership condition you can then use the UK sale proceeds to buy a France property within the 2 years of the sale and the CGT liability is apportioned / reduced by the fraction re-invested?

Thank you @tim17 and @larkswood12

Unfortunately, I had a small maison secondaire in France - had it for 30 years - so we’ve been living in that. It’s far too small so we were planning renovations with the money…

Just had a response from one of the people who advertise tax and other advice to Brits and they will only give tax advice if it’s combined with investment of a very large sum :scream:

Anyone know how I can go about finding some reliable advice about declaring my UK house sale here? I could try to get a rdv at the tax office but could do with thrashing out some options first…

Hi Angela,

last week when I was checking out the CGT situation further, I e-mailed a query to Kentingtons who I’ve previously had the benefit of a very long call with. Their response was:
Your CGT question is a grey area, but our feeling is that it would not be advisable to rent out the property to prospective buyers prior to sale.

You may recall that our service is to offer tax and investment advice in combination, to individuals who are resident in France (or are about to become officially resident in France), and provide total analysis of their situation with solutions to achieve their objectives. Our service is exclusive to those who have at least €250,000 in liquid financial assets.

We do not give standalone tax advice because we are not accountants. However, we are happy to recommend professionals who do. Below are the details of a tax lawyer with whom we work. He is French and speaks English fluently. We would suggest that you contact his office for a specialised view.

They also gave the assistants number. Happy to share that, I’m hopeful there would be no probs from Kentingtons side however are there rules with posting professionals details on the forum? Presume I could PM you (if I can remember how to).

From my point of view though, having read all the posts, the options and calculations re allowances and double taxation seem fairly clear - I guess you would really want an opinion on whether your UK house could be seen to be a principal residence from France POV thus avoiding the whole thing!

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Presumably you have read these…? The UK guidance gives a calculator to work out what tax you might have to pay.

It ought (:pleading_face:) to be straightforward. You declare to HMRC straight away, and then include in your French tax return. If you have paid tax in the UK then this will fall under the double exemption.

(Possibly if you have owned the place for more than 22 years then would be exempt from French capital gains tax anyway…).

I can’t remember details but when I disposed of my share of my mother’ s house it seemed straightforward. But then the capital gain was pretty small!

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Thank you @larkswood12 and @JaneJones - very useful. Kentingtons was one of the people I contacted, Dave so I do have the numbers you mention! I was looking to see what other contacts anyone might have before doing a major ring-round :smiley:

I’ve dealt with the UK side, Jane but will dive into your link on the French side. I “think” that I am exempt from CGT but not from cotisation sociale and also there is the question of their equivalent of wealth tax, which might also apply. (It was only a small house but I have heard the sum of 50,000 euros mentioned and anything bigger than a garage is likely to net more than that!)
I shall feed back any advice I get from anywhere, for future references