Selling second home in France

[peter@argentiere.fsn]

I have a profit on a second property in France after 3 years of £50.000 plus the original 10 k I put down as a deposit. I know I am liable for French tax on a second home. But I now want to bring that cash home to develop a property in the UK. Will I have to pay tax in England also on the remains after I have paid my tax in France.

If so what are the amounts or percentage I will pay when I bring the money back. Surely I can't be taxed twice.

[accountant@uktaxshop]

Peter,

You are correct that you wonÂ’t be taxed twice.

Under the double taxation treaty between the UK and France, and amounts you have already paid in France will be deducted from your UK liability.

The gross gain is computed as the difference in buying and selling price, less any costs of acquisition, disposal and any capital spends during ownership.

Your UK liability to CGT will depend on exactly what this property has been used for and how it is held.

If it is simply a second home held in your sole name you will get a 5% deduction in the gain for taper relief with 3 (full) years ownership, and your personal CGT allowance of £7900. Therefore on a £50,000 gross gain the tax would be computed on £39,600. If you are a higher rate tax payer this would be at 40%, £15,840.

The final tax paid will be equivalent to the UK charge less the amount paid in France. If the UK amount is lower than the amount already paid, nothing will arise, although neither will any rebate.

If you would like to go through the numbers with you for a modest fee please get in contact. I would suggest this is probably too complex an issue for the average person to tackle unaided. In addition if you have not already sold the property there may be some planning opportunities remaining to reduce the tax arising.

Regards,

James Smith
Chartered Accountant
www.uktaxshop.co.uk
01284 764436