French government plans to increase property taxes for foreign owned second homes may not be so serious for British and other owners of French properties, it is claimed.
According to UK regulated specialist mortgage broker Offshoreonline, there are considerations that could help them offset the tax.
Last week new French president Francois Hollande announced that non-residents who own a property will see the tax on their rental income rise from 20 to 35.5% backdated to 01 January this year and capital gains tax is to increase from 19 to 34.5% from the end of this month.
The broker points out that 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’s experience suggests that most of its clients do not pursue a commercial retail agenda. ‘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,’ said managing director Tim Harvey.
He believes that 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% tax payer, for example, will simply see the proportion of the tax due to the UK Authorities drop from 20% to 4.5%, as the French authorities take a large share of the sums due,’ he explained.
‘As with all tax related questions, though, the advice is to ensure you take appropriate local, professional advice which reflects your individual circumstances,’ he added.
Offshoreonline is a UK regulated specialist expatriate broker offering advice on UK, French, Italian, Spanish and Turkish mortgages, life insurance, pensions and savings for UK expatriates anywhere in the world.