Do you own a second property in France?
Second home owners in France after Brexit are likely to be affected by some changes now that the UK has left the EU. Likewise if you are an expat in France and have bought a second-property there as a rental investment, the new changes after Brexit could mean extra charges for you.
This isn’t the first change to disrupt second home tax in France. In 2017, Emmanuel Macron launched several economy-boosting initiatives aiming to calm disruption in the French property market, caused by short-term rentals, by introducing a new surcharge.
The surcharge could add up to 60 per cent to the basic council tax rate, meaning a second-home owner’s current average tax bill of €1,000 could rise to €1,600.
French Town Councils with a population of over 50,000 were given the option of imposing the tax charge, with 1,151 councils who could participate.
Paris put the 2017 tax reform into immediate effect as soon as it was authorised. Other councils were quick to follow: Bordeaux, Nice, and Saint Jean de Luz all adopted the new law.
Anne Hidalgo, the mayor of Paris, sought permission from the government to charge second-home owners in Paris at an even greater 250 per cent surtax. She was quoted in the Times saying that the high number of properties in the capital being bought to be rented out (including the 80,000 flats available for rent on Airbnb) were responsible for driving up housing costs for families moving to the city with the intention of staying there.
Because the surcharge makes rental property less of an attractive option, it therefore could lead to much more affordable housing for owner-occupiers.
Second home owners in France after Brexit
France’s National Institute of Statistics (INSEE) estimates there are 3.4 million second homes in the country, accounting for one in ten of all housing units. Paris alone contains 110,000 secondary houses!
The change won’t be felt for new non-residents looking to purchase a home in France, but when it comes to second home owners in France after Brexit, selling up might become more expensive. The 200,000 British expats who have their main home in France could face a higher capital gains tax from 2021 onwards. The standard social levy for EU residents with a second home in France is currently 7.5%, but as Britain has now left the EU, British homeowners will face a charge of 17.2% if they look to sell.
That’s not the only change facing second home owners in France after Brexit. From 1st January, a new rule will apply for UK residents spending time in the EU. UK residents will be able to spend 90 days out of every 180 day period in the EU. That means UK residents won’t be able to enjoy all 180 days in their property in France, so if you spend half of your year in your French home your plans may have to change.
Financial planning for a move to France
If you are planning a move to France in the near future – perhaps you have recently got a job in Paris – it’s worth speaking to an expert who knows how the French laws and tax rulings have changed after Brexit.
And once you’ve established your life in France – whether that’s in a main home or second home – sound expat retirement planning, involving support and advice from a professional financial adviser, is key to having the best expat life possible without financial fears.
If you are considering a move to France, or perhaps you just require financial advice regarding how best to manage your property assets abroad, either way, a Blacktower financial adviser in France will steer you on the right path, fulfilling all your expat retirement planning and financial services needs.
Disclaimer: The above information was correct at the time of preparation and does not constitute investment advice. You should seek advice from a professional regulated adviser before embarking on any financial planning activity.
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
A big part of your financial planning is deciding what is going to happen to all your money and possessions once you pass away. For many, effective estate planning is a crucial process that should not be taken lightly – and for a good reason.
The nose-diving post-Brexit pound is causing anxiety and practical financial problems both for British expats already in France and those who are planning to soon move there for their retirement, making it especially important that all concerned make positive and informed choices when seeking a QROPS transfer to France.