Moving to UK with French house

Lizzi · Postby **Lizzi** » Fri May 02, 2003 4:47 am

Hi;
I have been living and working in France for some years, and we recently bought our new apartment.

We may well be relocating permanently back to the UK. What is the situation with:
1. How to get the best information on taxes due on rental income, if we keep and rent out our French property.

2. We may rent in the UK for a year or two, whilst keeping the French place. If we then sell the French place, are we liable for CGT if we are only renting in the UK? I have seen conflicting information (where some say that the UK is your principal residence, even if you don't own.

Thanks!

demetris · Postby **demetris** » Fri May 02, 2003 5:28 am

A lot will depend on whether you are a UK domiciled person or not. If you are not Uk domiciled, you will not pay Uk income tax on the French rentals unless remitted to the Uk in the tax year when you become UK resident (ie spend more than 183 days here). But, of course you maybe liable to tax in the other country.

As far as liability to UK Capital gains tax on sale of the French property is concerned, again if you are non Uk domiciled will occur on a remittance basis. But, you need to check out with the other country taxes as to whether you will have any capital gains tax to pay there on disposal of the property.

Of course, if you are UK domiciled you are liable to pay income tax on your income and assets worldwide, subject to any double tax agreements.

I hope this helps.
Demetris Savva BA FCCA
http://www.tax-accounting-london.info
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Lizzi · Postby **Lizzi** » Fri May 02, 2003 5:46 am

Thank you for your reply.

I am British - but have been fully resident in France for 4 years. No property or any other links with the UK. So, I am not domiciled, right?

I will be returning, probably in Q3 of this year to be a full resident in the UK. Forever maybe!

I am still confused.
The plan is to move back to the UK. Rent the French apartment out on a 3 year lease.
Rent in the UK during this 3 years. Make a decision to either continue to rent the French apartment, or to sell (to buy a house in the UK).

My fear is that I will be subject to pay CGT on my French house, when it is my only property, and could be viewed as my principal residence (even though I don't live there).

I have read that the French charge CGT on property sold by non-residents. But, could I then claim this back from the UK (tax treaty)?

Thank you
Our plan is to

demetris · Postby **demetris** » Sat May 03, 2003 12:46 am

First, your domicile by default is your domicile of origin, which is the country of your parents domicile. So, unless you have officially and in writing changed it, you are UK domiciled. As such, you are liable to Uk income tax on the rents as soon as you become UK resident.

As the property has been your private principal residence, the capital gain will be exempt in this country, including the last 3 years of ownership even if not your residence for whatever reason.

There might be more reliefs, but you should seek researched qualified advice.

Demetris Savva BA FCCA
http://www.tax-accounting-london.info