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The post-Brexit tax rules on selling second-homes in France

British second-home owners in France who want to sell their properties are being warned of an extra layer of administration - and expense - in place since Brexit.

The post-Brexit tax rules on selling second-homes in France
Photo by Philippe HUGUEN / AFP

Brits wishing to sell property in France may now need to appoint a représentant fiscal (tax representative) in France in order to properly declare the sale to French tax authorities. 

Who?

This law applies to people who own property in France but do not live here – mostly that would be second-home owners but it could also apply to, for example, anyone who has inherited property.

This requirement has always been the case for non-Europeans such as Americans, Canadians and Australians and now also applies to Britons since the end of the Brexit transition period. People who live in another EU or EEA country are exempt.

The law is based on residency, not nationality. So if, for example, you have your main residence in the UK but have an Irish passport, you would still be covered by this requirement.

Exemptions

As well as EU residency, there are a couple of other exemptions;

  • If you sell your property for less than €150,000
  • If you have owned the property for more than 30 years (in which case the sale is exempt from capital gains tax and social security contributions).

What is a représentant fiscal?

This is simply a representative for tax purposes in France, and the person does not need specific qualifications in law or accountancy.

The following can be appointed:

  • A company or organisation already permanently accredited by the tax authorities;
  • A bank or credit institution operating in France;
  • The buyer of your property, if they are domiciled in France for tax purposes (they do not need to be a French citizen);
  • Any other individual who is domiciled in France for tax purposes (they do not need to be a French citizen) – in this case they will need to be accredited by the local authority;
  • If the property is in Paris, the individual will need to be accredited by the Île-de-France tax authorities – département de Paris-Pôle gestion fiscale Centre-Missions foncières, 6 rue Paganini, 75020 Paris. Tel: 01 53 27 46 45

If you decide to appoint an individual rather than a company as your représentant fiscale, bear in mind that the process can be quite complicated, so it would be better to check that they are confident in dealing with the tax authorities, to ensure that you don’t end up with unfinished business with the tax office.

If you chose a company, they will naturally charge for the service. 

Whichever representative you chose, you will need to provide a dossier of documents relating to the property sale and also confirming that you are a tax resident of a country outside France (tax returns, banking information, for example).

Will you have to pay tax on the proceeds of the sale?

If your main residence is not in France, you have no other income in France and you do not complete the annual French tax declaration you will not usually have to pay tax in France on the proceeds of the sale, provided your total estate is worth less than €1.3 million.

Properties worth more than €1.3million may be liable for the impôt sur la fortune immobilière (property wealth tax).

You will of course have to declare the income from the sale in the country where you are resident and, if applicable, pay capital gains tax.

What about French property taxes?

If you have owned property in France you will have been paying the taxe foncière and taxe d’habitation.

These will cease, but bear in mind that taxe foncière is charged based on who owned the property on January 1st of the relevant tax year. So if you sold your property in February 2022, you will still get a tax bill in autumn 2022 to cover that year. Only the following year will the new owner become liable, unless the sale contract for the property included an agreement to share or split outstanding taxes.

Find more information on the Internationals section of the French tax office website HERE or pay a visit to your local tax office in France. Find your local office by searching ‘Centre des Finances publiques’ plus the name of your commune – tax offices are open to the public on a walk-in basis and the staff are usually friendly and helpful. 

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PROPERTY

Courtier: Should you hire a broker when buying property in France?

If you're researching the French property market, you might have come across mentions of 'courtiers' - here's what they do and whether they are necessary.

Courtier: Should you hire a broker when buying property in France?

The French ‘courtier‘ is usually translated as a broker, and the Notaires Association describes their role like this: “the broker is a true intermediary in banking operations. His/her role is to negotiate the best rates for you, but not only that: they will also find the most advantageous financing conditions for the realisation of your project.”

Essentially they act as an intermediary between you and the banks, so they’re only required if you need a mortgage or a loan in order to buy your French property. 

Their job is to research the best deals for you and then to help you put together your application and ensure that all your paperwork is correct – unlike the notaire, instructing a courtier is not a required part of the process, so the decision on whether to instruct one is up to you. 

So is it worth it?

Among French buyers, around 30 percent of mortgages are obtained using the services of a courtier, and this rises to 60 percent among young, first-time buyers, who generally find it harder to access credit.

Some of things to consider are your level of French and confidence in negotiating French bureaucracy, your financial situation (since French mortgage lenders tend to be stricter than those in the UK or US) and whether you currently live in France or not (since there are extra hoops to jump through for overseas buyers).

READ ALSO Is now a good time to buy a home in France?

“Things have changed,” Trevor Leggett, group president of Leggett International estate agents, told The Local. “It’s now more important than ever to work closely with a reputable broker.

“In France it is all paper-based, very old-school and extremely bureaucratic, a different world entirely to the UK. Preparing the client “dossier” so that it will be accepted is an art form.”

READ ALSO MAP: Where in France can you buy property for less than €100k?

He advised non-resident international clients, particularly, who may not be au fait with the French system to seek the help of a broker who knows the ropes.

“The question is no longer really about savings,” he said. “It is about finding a bank that can actually lend to the client profile, interests rate are secondary. 

“It occasionally happens that one bank can be played off against another, or to shop around, but it’s a rare event nowadays.”

READ ALSO Revealed: The ‘hidden’ extra costs when buying property in France

And he had no hesitation in recommending that prospective buyers find a broker to sort out the financing.

“The lending market has tightened for international buyers and a good one is worth their weight in gold,” he said.

READ ALSO EXPLAINED: Time-frame for buying and selling property in France

In France, you make an offer on a property and then you begin the mortgage process (while in the UK it’s the other way round) so problems in getting your mortgage approved could lead to you losing your dream property.

“[Using a courtier] can be the difference between buying and not,” added Trevor.

“It’s not just any possible language barrier – but understanding the process and the different players in the market.”

How much?

The cost of hiring a courtier is borne by the buyer – but how much do they charge?

The courtier usually charges a percentage of the total mortgage amount – fees must be fixed in advance and are only payable once your mortgage application has been approved. 

Fees vary between different areas and different businesses, but the average fee is €2,000, which amounts to around one percent of the purchase price.

Many brokers set a minimum amount – around €1,500 – for smaller loans, and take a percentage of larger loans, so how much you pay depends on your property budget. 

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