French holiday home owners face new tax changes
French holiday home owners may have little to fear from new tax changes, thinks Offshoreonline.org
Recent changes to the French tax system announced by president Francois Hollande’s government may not be so serious for British and other owners of French properties, believes UK regulated specialist mortgage broker Offshoreonline.org. Under their proposals, non-residents who own a property will see the tax on their rental income rise from 20 to 35.5 per cent, with a rise in capital gain taxation from 19 to 34.5 per cent also planned.
However, the new taxes do not apply to owners who do not rent their properties for commercial income and for those who do operate a commercial rental business, just as in the UK, it is possible to offset costs associated with their business against the potential taxable income.
Offshoreonline.org’s experience suggests however that most of its clients do not pursue a commercial retail agenda. Managing director Tim Harvey said, “The clients who we arrange mortgages for are generally looking for a holiday home for themselves and close family and friends. These may be ski chalets or they may be located in one of the popular tourist areas such as the Cote D’Azur or Dordogne. For these owners, a commercial rental plan is simply not on their agenda.”
For many taxpayers in the UK, the changes will be academic, as rental income from abroad needs to be declared to the UK Revenue. A UK based 40 per cent tax payer, for example, will simply see the proportion of the tax due to the UK Authorities drop from 20 per cent to 4.5 per cent , as the French authorities take a large share of the sums due. As with all tax related questions, though, the advice is to ensure you take appropriate local, professional advice which reflects your individual circumstances.