If you are considering buying a French Property

Before buying: enquire concerning the taxe foncière et taxe d'habitation

The taxe foncière is levied from the proprietor (owner) of residential properties situated within France. The taxe d'habitation is also applicable to all residential properties, but it is due from the occupant, whether the occupant is the owner, the tenant or a free occupant.

When buying: liability

If the property is sold during the year, the seller and the buyer often agree to share the tax, by a clause inserted in the conveyance deed and any preliminary agreement.

Succession law should also be considered.  For example, unlike in the UK, no inter-spouse exemption exists – so if you leave property to your other half in your Will, they will be forced to pay. Consider the possibility of using a French solicitor to draft a contract of communaute universelle,which guarantees joint ownership of assets between spouses and avoids Inheritance Tax liability.  The rate of Succession Tax also differs in that it depends on the relationship between donor and donee, varying from five per cent up to a maximum of 40 per cent.

If you are considering buying a French Property, I would suggest the following steps to help reduce your liabilities:

• Look at structured borrowing to purchase the French property.
• Consider setting up a societe civile immobiliere (SCI), a type of business, to own the property. This structure can create significant tax benefits.
• If you plan to let out the property, consider setting up a commercial entity to handle it – such activities carry beneficial tax consequences.
• Make a will under French law, stating that it only applies to immoveable property (interest in land and permanent buildings on that land in France).
• If you are leaving the UK to take up permanent residence in France, plan well in advance – you may be able to use a temporary residence to make your financial affairs more tax efficient.

Above all, take professional advice, both in the UK and in France, before purchasing property there.

Once selling: capital gains tax

The rate of Capital Gains Tax (CGT) for both French and non-French residents, who are residents of an EU country, is 16% of the net gain. If you are French resident you pay an extra 10% in French National Insurance making the effective rate 26%. Once the 16% has been paid the non-French resident individual taxpayer can have no further French tax liability. If the sale is for less than €150, 000 no tax agent is appointed. You simply fill in form 2090 which the notary will have. If the sale price is over €150, 000 you still need a tax agent.

Consider French wealth tax