Hi All A friend is selling up and moving back to the UK.
Her husband died about 10 years ago and half of his half went to their daughter although mother continued to live in the house ( there is a good relationship between mother and daughter).
She has sold the house for about €220000 I am not sure what she and her husband paid. So the daughters quarter would be about €55000.
They have been told by the Notaire that the daughter will owe €8000 in tax. I can’t see where he gets this and have told her to ask the Notaire for a breakdown of the tax charges.
It looks to me as though she would owe social charges at 7.5 % and possibly some capital gains. But after 10 years shouldn’t both of these have reduced. 8K comes to about 14.5% can anyone throw any light on this?
Regards
Nick
Capital gains is 32.2% including prélèvement sociales. With an exemption from some of the prélèvement is would reduce to 28.7%. After 10years ownership there would be reduction of about 30% on the actual amount owed (not a 30% reduction on 28.7%) so I can imagine that 14.5% may be in the right area
But without knowing the purchase value it’s impossible to estimate. And whether her share would have a starting value on the date she “acquired ” her portion of the property.
A notaire will provide a detailed calculation - and they do sometimes get it wrong! And she might also have to pay for a fiscal representative if she is non-resident.
Sound advice.
That would be my assumption, because her inheritance tax liability (as was my daughter’s) would have been calculated on the value of the house at that time.
True too, and some are more “sympathetic” than others.
Thanks, you are quite right on the Notaires sometimes getting it wrong one of our local Notaires has a terrible reputation.
More on this fiscal representative, is this now a requirement? How much can they charge and what do they do?
We have another friend who has moved back to the UK and has lung cancer, her only residence here in France is for sale. She has changed her tax back to UK, I think a requirement after six months but has a Brexit residence permit which again I think lasts for five years. The property is probably going to sell for less than she paid for it due to roof and heating problems. Will she need a fiscal representative? It has been talked about by the immobilier but they admit they do not understand the rules.
Regards
Nick
People who are not French residents on the day of the sale must appoint a fiscal representative, In theory it can be just about anyone, but in practice notaire’s insist that one uses someone like SARF. And the fee is 1 - 4% of the sale value!
But only for sales over €150,000.
This explains the scurrilous service
https://www.sarf.fr/wp-content/uploads/2022/08/SARF_2022_-A4-Representant_Fiscal-_EN.pdf
If friend A is still resident she shouldn’t need one, but not sure about daughter if her share is more than €50,000 and she is non-resident.
Friend B will probably need one, and may have a battle to get them to accept that she shouldn’t pay the full so ial charges but just the prélèvement sociale of 7.5%
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Thanks
Yes hopefully Friend B will not need one as her sale will be well under €150000. I am not sure how this works but she still has French residency rights but is staying with her daughter in the UK.
We will have to see what the Notaire says when/ if she gets a sale. It will get much more complicated if she dies as she has two daughters and grand children from a son who died, all in the UK. How they will divide up her estate will be interesting.
Regards
Nick
If she has been there a bit and is unlikely to return to France then she will have become fiscally resident in the UK, and needs sort this out formally. This will make the inheritance simpler if her beneficiaries are also UK residents. She can then leave whatever proportions she likes to her descendants and will not be constrained by the French rules.
I presume by saying she has French residence rights you mean she has a permanent carte de séjour. That doesn’t mean she is fiscally resident in France.
Hi Jane
Bad news today we spoke to her daughter and it looks as though she only has weeks left.
Yes I mean she has a Carte de Séjour, after six months back in the UK she has changed her tax status back to UK but we (my wife) will have to do her final French tax return.
She wants to leave her estate (house in France worth about €110000 ) to only one daughter, but our understanding is that she not have the choice and the Notaire will have to divide it between two daughters and the children of a deceased Son. Do you think our evaluation is correct if she dies before the house is sold?
Regards
Nick
How sad.
Has she written a will that clearly states she wishes her inheritance to be dealt with under English Law ? If so, as a UK resident, she should have testamentary freedom to do what she likes. There is a new law in France that limits disparity between children in France, but if her daughter and grandchildren don’t live in France this could be ok.
It is a complex area, so professional advice needed. But if the notaire has limited experience of cross border inheritance then push hard if they say this is not possible. Insist on being given the legal basis for his/her decision so you can check with another notaire
This article sets out the issue quite clearly
If her estate is worth over the UK inheritance tax free level £375,000?) then also need to check that this doesn’t incur extra tax.