Tax gain of £20,000 post-Brexit if you own a second home in France

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British taxpayers who own property in France have been given the green light to claim thousands of pounds of overpaid duty, a post-Brexit boon for owners of second homes.

The French tax administration has said it will reverse post-Brexit tax hikes applied to foreigners who own property in the country. Some owners could receive £20,000 from French authorities, experts have said.

But British citizens now face a battle with French bureaucracy to get their money back. Francois Mounielou, of Druces LLP, a law firm, warned that the tax authority was struggling with a Covid backlog and owners could have to wait two years for refunds to be made.

A UK taxpayer with a holiday home that generated €10,000 (£8,349) in rental income last year will have overpaid €970 in tax which he can now recover. Capital gains rebates will be even greater. A British citizen who bought a second home in France for €250,000 in 2012 and sold it this year for €350,000 can now claim €8,900 in overpaid social charges from his profits.

Prior to Brexit, taxpayers living in the UK who owned property in France typically paid French social charges of 7.5%, a reduced rate from the rate for French taxpayers of 17.2%. This follows a 2015 EU ruling that people should not pay full French social charges if they paid tax to another EU social security jurisdiction.

Since January 1, 2021, when the Brexit transition period ended, British taxpayers were no longer covered by the 2015 EU decision. Their social security bills in France have thus jumped by almost 10 percentage points to 17.2%.

But last month French tax authorities issued administrative guidance that the terms of the post-Brexit trade and cooperation agreement essentially matched EU terms, and therefore UK taxpayers who own French property should pay only the reduced rate of 7.5 pc.

Rising house prices mean taxes on profits from home sales in France have skyrocketed over the past year. In the year to December 2021, the value of French properties increased by 7.1%, according to the French National Statistics Office. For houses, the jump was 9 pc. Residential rents increased by 1.6 pc over the same period.

Jack Harris, of Knight Frank estate agents, said the tax cut could lead to increased sales. “This may well encourage some UK owners to sell into a buoyant market given the high level of international demand we are seeing in prime destinations such as the Côte d’Azur, Provence and the French Alps,” he said. -he declares.

The deadline for claiming a rebate is the second year after the year in which the tax was paid. The French tax administration did not respond to a request for comment.

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