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PROPERTY

The post-Brexit tax rules on selling second-homes in France

British second-home owners in France who want to sell their properties are being warned of an extra layer of administration - and expense - in place since Brexit.

The post-Brexit tax rules on selling second-homes in France
Photo by Philippe HUGUEN / AFP

Brits wishing to sell property in France may now need to appoint a représentant fiscal (tax representative) in France in order to properly declare the sale to French tax authorities. 

Who?

This law applies to people who own property in France but do not live here – mostly that would be second-home owners but it could also apply to, for example, anyone who has inherited property.

This requirement has always been the case for non-Europeans such as Americans, Canadians and Australians and now also applies to Britons since the end of the Brexit transition period. People who live in another EU or EEA country are exempt.

The law is based on residency, not nationality. So if, for example, you have your main residence in the UK but have an Irish passport, you would still be covered by this requirement.

Exemptions

As well as EU residency, there are a couple of other exemptions;

  • If you sell your property for less than €150,000
  • If you have owned the property for more than 30 years (in which case the sale is exempt from capital gains tax and social security contributions).

What is a représentant fiscal?

This is simply a representative for tax purposes in France, and the person does not need specific qualifications in law or accountancy.

The following can be appointed:

  • A company or organisation already permanently accredited by the tax authorities;
  • A bank or credit institution operating in France;
  • The buyer of your property, if they are domiciled in France for tax purposes (they do not need to be a French citizen);
  • Any other individual who is domiciled in France for tax purposes (they do not need to be a French citizen) – in this case they will need to be accredited by the local authority;
  • If the property is in Paris, the individual will need to be accredited by the Île-de-France tax authorities – département de Paris-Pôle gestion fiscale Centre-Missions foncières, 6 rue Paganini, 75020 Paris. Tel: 01 53 27 46 45

If you decide to appoint an individual rather than a company as your représentant fiscale, bear in mind that the process can be quite complicated, so it would be better to check that they are confident in dealing with the tax authorities, to ensure that you don’t end up with unfinished business with the tax office.

If you chose a company, they will naturally charge for the service. 

Whichever representative you chose, you will need to provide a dossier of documents relating to the property sale and also confirming that you are a tax resident of a country outside France (tax returns, banking information, for example).

Will you have to pay tax on the proceeds of the sale?

If your main residence is not in France, you have no other income in France and you do not complete the annual French tax declaration you will not usually have to pay tax in France on the proceeds of the sale, provided your total estate is worth less than €1.3 million.

Properties worth more than €1.3million may be liable for the impôt sur la fortune immobilière (property wealth tax).

You will of course have to declare the income from the sale in the country where you are resident and, if applicable, pay capital gains tax.

What about French property taxes?

If you have owned property in France you will have been paying the taxe foncière and taxe d’habitation.

These will cease, but bear in mind that taxe foncière is charged based on who owned the property on January 1st of the relevant tax year. So if you sold your property in February 2022, you will still get a tax bill in autumn 2022 to cover that year. Only the following year will the new owner become liable, unless the sale contract for the property included an agreement to share or split outstanding taxes.

Find more information on the Internationals section of the French tax office website HERE or pay a visit to your local tax office in France. Find your local office by searching ‘Centre des Finances publiques’ plus the name of your commune – tax offices are open to the public on a walk-in basis and the staff are usually friendly and helpful. 

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PROPERTY

Bail mobilité: How France’s short-term rental contracts work

If you're after a short-term rental in France you might be offered a 'bail mobilité' (mobility lease) - here's how these work and whether they're a good deal.

Bail mobilité: How France's short-term rental contracts work

The bail mobilité is a relatively recent invention in France. It was created by the Elan law in 2018 and is a rental contract intended for people who have a temporary need for housing due to their professional activity – whether that be a work transfer, temporary posting, or status as a student. 

In order to qualify, the tenant must show proof that at the beginning of the lease they are in one of the following approved situations: enrolled in professional training or higher education, completing an apprenticeship or internship, on a temporary posting or having received a work transfer, or working as a volunteer as “part of a civic service.”

You can find more specific information about these situations on the French government website HERE

This essentially means that if you are visiting France for an extended period of time for tourism purposes, you likely would not be able to rent using a bail mobilité. This might be a source of confusion for those who see these lease arrangements advertised on websites such as Airbnb (more on this below). 

There are some rules that lodgings listed as “mobility leases” must follow. They must always be furnished rentals – meaning they are required to provide the tenant with specific items such as bedding, dishes, and other things. You can learn more HERE.

READ MORE: Renting property in France: Should I go for furnished or unfurnished?

Next, the lease itself must be between one to ten months. It cannot exceed ten months. Additionally, mobility leases cannot be renewed. If the tenant and landlord want to renew the rental, it will have to be within the context of a standard furnished rental contract.

With a mobility lease, the owner is not allowed to ask the renter for a security deposit (dépôt de garantie). However, they do have the right to request a guarantor (un garant, or sometimes referred to as a caution). 

In terms of the actual lease itself, it must include certain documents, similar to a standard furnished rental contract. The lease must include an inventory of fixtures (état des lieux), the technical diagnostic file (this includes the energy rating, for example), and if the property is located in a condominium or apartment building, then the regulations concerning common areas. 

The tenant retains the right to move out at any time during the lease – as long as they give one month’s notice to the owner (or the real estate company if the accommodation is managed by an agency). Typically, this is done via registered letter (lettre recommandée) with acknowledgement of receipt.

On the other hand, the landlord cannot terminate the lease before the end date (unless the tenant does not respect their obligations, such as paying rent). 

When it comes to determining the rental price of a dwelling listed under a bail mobilité, the landlord can set the rent by their own standards, as long as the lodging is not located in a zone tendue (housing shortage area) and therefore is not bound by local rent caps. However, rent cannot be revised during the lease and it should be listed within the rental contract.

Finally, if the property is being rented to more than one person (a colocation), the lease cannot require the roomates to have a “solidarity clause.” This is a part of the lease that would outline the requirement of the co-tenant(s) to pay the rents even if another co-tenant gives notice and moves out. Typically, this would also outline when that expectation for the other tenant(s) to cover remaining rents would end. 

Common questions about mobility leases

First, the bail mobilité is often confused with the “secondary-residence lease.” The two differ primarily due to the fact that a mobility lease can constitute a primary residence, depending on the duration of the lease.

The next common question regarding mobility leases is whether it is possible to rent one via an online rental platform, such as Airbnb. The short answer is – yes. However, as mentioned before, the bail mobilité is only available to specific groups of people.

Renting with a mobility lease absolves the requirement to pay the ‘tourist tax’ (taxe de séjour) in certain cities – as it is a residential lease and not a tourist accommodation. The tourist tax is automatically added to Airbnb charges, but in certain French cities such as Paris, Lyon, Bordeaux, Toulouse, Nantes, Lille Nice, Strasbourg, and Marseille, booking with a mobility lease automatically exempts the renter form paying the tourist tax. 

READ MORE: What are the rules on renting out French property on Airbnb?

In other parts of France, people signing mobility leases via Airbnb may be charged a tourist tax, but this can be refunded by request at the local town hall. 

Additionally, renting a property under a mobility lease exempts the owner from having to do a “change of use” declaration with the town hall, as the property will technically continue being used as residential accommodation, rather than touristic. This authorisation is mandatory for furnished tourist accommodation in many French cities.

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