Taxing Times

Market Trends
The news from the UK, which will inevitably have some impact here, is that borrowing from First time buyers has hit a low, indicating a slow down in the marketplace for property sales. After a lull in December, our level of viewings has picked up dramatically, so the signs are not all bad.

To overcome any dip in the market we have a visit to the French Property Exhibition scheduled in March at Edgbaston in Birmingham. So we are looking especially for good quality property between 200-400,000 € to take with us. The last time I was at Edgbaston was to play cricket, representing the MCCC XI against Warwickshire and Bob Willis - so this visit should be less taxing!

Capital Gains Tax
Beware! If you are about to sell your French home but have lived in France without being properly registered under the French tax system, you risk being refused the principal private residence exemption. Indeed without the up-to-date filing of your French income tax returns declaring your worldwide income, you will not be registered under the French system and the authorities should simply tax the net gains as if you were resident outside France at rates of 16% or 33.3%.

In France the onus is on the taxpayers to obtain and file their tax return. Once the first return has been filed the person is duly registered and should receive a pre-identified tax return every year. Unfortunately, it appears that a great deal of well-meaning expatriates have been wrongly advised by none other than their local tax offices. Some even seem to state that the receipt of foreign source income simply dispenses the recipient from filing a resident tax return. This is simply not true. Do take appropriate action to ensure that you don’t get caught in this potential tax-trap!

Inheritance Tax
Some welcome news - the Loi de Finances 2004 has introduced an overall inheritance tax-free allowance of 50,000 € on the total amount inherited by the descendant(s) and surviving spouse of a deceased. This applies in addition to the existing allowances and with effect from 1 January 2005. Given that in France the allowances are much less than in the UK this is indeed good news. It is still worth checking that your finances are properly arranged in order to minimise the impact of French Inheritance Tax however, as some people have bought under the “en-tontine” regime which may not be the best solution.

TV information
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TSUNAMI Everybody has been appalled at the destruction caused by the Tsunami in the Indian Ocean, but UK owners of holiday property in France can help the appeal cause by arranging their holiday home insurance through ourselves at Allez Français. Property owners should bear in mind that it is normal to give 2 months notice to an existing insurer in France, so a little forward planning regarding renewal dates may be required. Visit the website www.allez-francais.com for full details. Thank you for any support that you can give in this respect.