Thanks for the reply …so kind…well let me reply on few points you made:
1: Why will be down for 50% CGT?
2: We are still in UK and we do not want to get a mortgage in France, even if we wanted we couldn’t with our current salary …our dream is to be mortgage free… If we will rent our house after paying the mortgage well won’t be much left anyway …we not millionaires lol like some.
We will have to sell to buy outright a french property…ideal a small b&b
3: Sell when you hit the sweet spot of dual CGT…means??lol
A good idea and one well considered in France.
To add to the excellent analysis by @larkswood12 don’t forget the succession issues should something untoward happen to either of you. Any purchase in France will need to be well structured.
The questions seem to be going around in circles even though you have received sound answers to your queries.
There seems to be a preoccupation with your concern of CGT.
I have posted previously on this although not sure which thread.
CGT is exactly that, a gain on your capital investment. Have you done your sums? What did your current UK property cost to buy and what might it sell for?
If joint owned then with each of you having a yearly allowance of ,I think, 12.5k in the UK that means you can make a capital gain at point of sale of 25k and not incur CGT. Beyond that you pay tax on your profit so nowt wrong there, work on the theory that if you are not paying tax then you are not making anything. Personally I would be happy to pay tax knowing that I had made a profit.
Of course how long you have owned the house and how long you might not live in it are all factors to consider.
I wish you luck with your future plans but always remember that information gleaned from forums. no matter how sincerely and genuinely offered, is not a replacement for professional advice that should provide a guarantee backup.
I agree and thank you…Im clear on how much I will pay in UK but my worry is in France …the way they calculate its not fair and bill could be potentially extremely high…obviously im seeking professional help but trust me John even between professionals there is confusion on the matter.
Angela said that local tax office wasnt interested on the sale of her uk property and that’s not the first time I ear that so i think I will call the local French tax office and will take it from there…if they are happy if I pay the CGT only in UK well so be it lol
thx
keep renting may be a good idea if you dont have a mortgage lol…from the rent we will have to pay the mortgage first…after that we will have only a bit left sadly
Your original question is about Tax Implication.
If you do actually come to live in France, your personal situation is something you might need to think about, with regards to Tax/Property and all sorts of things…
Being “only friends” even for 20 years… does not necessarily earn either of you any Brownie Points with the French Tax Man etc …
lol
I wonder whether it would be financially beneficial to pay off the UK mortgage early - paying the early repayment fees / interest.
It will probably still be cheaper than CGT (UK and France) and will remove the stress of the whole process. You will then have (hopefully) some cash in the bank ready for when you find your dream french property
When we came to France 14 years ago we had lived together 20 years, never felt the need to marry. ALL the advice we had before coming to France was GET MARRIED. So, it became one more thing added to the list along with things like sort out a removals firm. Being married, it’s one less thing to worry about living here - no ambiguity about tax / inheritance etc. Much easier.
That may be the case but the France CGT of 36.2% plus a possible surtax of 2-6% if the gain is more than 50,000 EUR will very quickly erode the extra value you may end up building in the property. Plus the UK CGT (18% or 28%) that you will also have to pay. (Credited against your France CGT liability).
I would calculate the expected gain on the house if you kept it that extra 2 years minus France & UK CGT, compare to sale whilst still UK resident minus early redemption fee on the mortgage.
You may be surprised by the numbers.
Blevins Franks - 2020 tax guide - snip:
What about selling your property?
In France, the gain on the sale of your French main home is always exempt from capital gains tax
provided that the property is your actual home at the time of sale.
However, under the UK/France Double Tax Treaty, if you are French tax resident, gains arising on
UK properties are subject to French capital gains tax at 36.2% including social charges (plus a surtax
of between 2% and 6% where the gain is more than €50,000). This would apply even if the property
was your main home before you moved to France. You could also be liable to UK capital gains tax
and in this case, to avoid double taxation, you would get a tax credit in France for tax paid in the UK.
Sorry to deviate slightly but would you calculate French capital gains on sale of a UK property(bought while resident in France converting € to pounds) using the €/ sterling exchange rates at the time of purchase and sale (taking into account still resident in France and sale money recoverted to euros) ,or just convert the UK capital gain back into €rate at the date of sale ?
Thanks in advance
