Property Taxes in Bordeaux
Many people can think that buying a house in a foreign destination will be much cheaper than buying a property in the UK. Whilst this may be true, it is advisable to take some time investigating and understanding your tax and legal position before you make concrete decisions about your dream property as they can add significant amounts to your purchase price and annual maintenance charges.
Foreign property taxes & legalities
Don't rely on your estate agent or seller to furnish you with all the facts, they are afterall after the sale and won't want you to be delaying that process completing.
When buying in a foreign country, you should always consider the tax implications of buying, selling and possibly renting out your property. Taxes rules and rates can vary immensely from location to location so make sure you have done your homework as unexpected taxes could be crippling for you further down the line. Your tax situation may well be affected as a result of your foreign property purchase so advice should be sought from a professional who can offer specific guidance on issues such as:
- taxation in the UK
- capital gains tax
- succession laws and inheritance tax
- foreign taxation and
- double taxation implications
For example, did you know that if you decide to rent out your property abroad you will need to declare this income to the taxman in the UK and potentially the country where you have bought the property, no matter how small the sums involved? And, did you know that most countries will apply some form of 'gain taxation' against the sale of a second home? You may therefore wish to set this off against the profit you make on your purchase when selling it at a later date. You should also be aware that some countries have different succession and inheritance taxes and laws that are very different to that in the UK which can lead to expensive traps for the uneducated.
These are just a few areas within the complex subject of property taxes which may, or may not be applicable to you when purchasing your property abroad. It's therefore vital that you seek solid tax and legal advice before taking the plunge on any type of foreign property.
Please note that foreign property taxation and legal issues are complex and difficult subjects with which you should seek independent advice indivdual to your requirements. Taxes and legal issues outlined here are merely general in nature and therefore no liability is accepted in connection with the information provided.
As a property owner in France, you will find yourself liable for a host of different taxes depending on your individual circumstances. As individual circumstances can vary immensely from one property owner to the next, it is recommended that you seek further specialist tax and financial planning advice from those in the know. Here is a summary of a few taxes which you may find relevant to your French property purchase:
If you own property in France you may be liable for a wealth tax on your property. Wealth tax applies whether you are a resident or non-resident of France as it is dependent on your property value. If you are resident in France (ie. you spend more than 183 days a year there), the tax is levied on your worldwide assets. If you are a non-resident of France, the tax applies to your French assets only. France’s wealth tax is paid in June and is imposed on assets worth more than €760,000.
Capital gains tax
If you come to the point where you want to sell your home in France and it is your principal residence, as long as you reinvest any profits made into another property you will not have to pay capital gains tax. If on the other hand your home is a second or a holiday home or even a commercial type property that you rent out and/or somehow generate an income from, you may be liable to pay tax on any gain you make from the resale of it. The amount you could be liable for is complicated to calculate and so you should take professional advice on this point.
When purchasing your property in France, it is wise to give a little consideration to your personal circumstances and your longer term tax positions. There are 'rules of succession' in France which means that all property passes automatically to children of the deceased and under some instances of French law, you are not able to dispose of your estate as you see fit. Inheritance Tax in France is not cheap and is pretty complicated. Since we are not tax specialists, it is highly advisable that you take advice on both the French and UK legal systems before taking the plunge and signing the 'acte de vente'.
Local property taxes
In taking ownership of a property in France you should be aware of the various Bordeaux taxes which will apply to your property. Land tax (taxe foncière) and occupancy tax (taxe d’habitation) are used to pay for services including refuse collection, street cleaning, schools and other local community facilities. It is important to understand that these two taxes are payable even if your property is just a holiday home. The taxes are set by the local authorities and can vary considerably depending on the area. Tax foncière tends to be the more expensive of the two.
Paid by the owner of the property and is calculated using the likely rental value of your home.
Paid by the occupier of the property, ie. your tenants if you rent out the property. It can be paid in monthly instalments from a French bank account to make it a little easier to manage. You are potentially exempt from paying the taxe d'habitation if your property is completely empty and has no utilities (ie. water or electricity).