SELLING YOUR PROPERTY IN FRANCE

SELLING YOUR PROPERTY IN FRANCE
A note to regular visitors to my blog: this post is long and only of interest to people who ... have a property in France that they want to sell. Newcomers will be visiting because they have picked up this item from Google and are looking for enlightenment on the somewhat arcane procedure that operates when the poor old Brit, for whatever reason, needs to offload the place that has been the main subject of his conversations ever since it was acquired. NEWCOMERS WELCOME, therefore, but please don't eat and run. There are plenty of items here that deserve some more of your time. To my regulars I say, I don't mind in the slightest if you skip this and take a trip down memory lane (Oh, but he does love a cliché, does this one).


What follows is based on my personal experience and should not be taken as professional advice.

I believe that there is taking place a quiet but growing exodus of British property owning people from France. The financial pinch in the UK is beginning to hurt and even if it is not yet hurting the UK French property owners they are reading and hearing about the pain of others: it is disconcerting. They are also experiencing a steady increase in the costs of maintaining property and of French taxes. To make a worrying time even worse the newspapers say that M. Sarkozy has been planning to introduce a new property tax for foreign owners based on rental value (whether you rent it out or not) although he currently seems to have held off on implementing it. To make matters even worser (there is no real superlative to cover this situation) the UK government is now planning to introduce extra taxes for those who rent out their French properties along very similar lines to the Sarkozy idea. In times like these liquidity is all: an asset in the form of a house or apartment in France can seem depressingly illiquid – particularly when French people are facing their own financial pinch. I know quite a few English people who have decided to call Time on their investments and repatriate their cash: their decision to do this might also be stimulated by the obvious shakiness of the euro. I am now one of the lucky ones. I have just sold my apartment, a two bedroom duplex plus parking space and now have pounds sterling looking for a safe home with a British bank, naïve fool that I am (but I don’t have to worry about Greece and Portugal going broke… I think). I’m writing this for the benefit of those people contemplating the retreat from France.

There are plenty of publications telling you how to set about buying a property in France but not many that tell you what is involved in selling it. Here is what I have learned from my recent experience.


Finding your buyer

Unless you can actually drag a potential buyer into your French property and do a face-to-face sales pitch you are probably going to go down the traditional route of finding a way of (a) describing your place in such a way that a comprehensive and attractive picture is conveyed, (b) finding a way of targeting people who are in the market for buying, (c) enabling people who have shown an interest to see the reality and (d) negotiating a mutually acceptable price. And obviously a certain amount of salesmanship does not go amiss in such a situation.

One could advertise in one or more of the several magazines that cover life in France for people in the market for buying a place in France: advertising rates are not excessively high and they meet requirement (b) above very well but one can quickly see the disadvantages under (a), (c) and (d).

Other media could be considered include websites that provide a well targeted medium and exist to carry advertisements such as yours. Again, good for (b) but they fail under the other points.

Remote selling is always going to be taxing. Far better to use an estate agent: agents in France push the decision in their direction by not charging you even one euro for carrying out the complete function. It is common sense from the beginning to try to stack the odds in favour of a sale and the choice of an agent who is very influential in the local market gives you that advantage.

The Estate Agent

I advertised my apartment with a French estate agent; indeed, he was the man that sold it to me in the first place some twelve years ago. Mine was in the centre of a small seaside town in Brittany which enjoys a very busy summer season lasting through July and August. There is some activity outside that period and this is often when people looking for something to buy turn up to see what is available. The estate agent handles sales and also has a thriving rental business. His premises are in the centre of the town and are liberally decorated with pictures and details of places for sale and rent. He also publishes an annual holiday rental booklet which has a high take-up from passersby. During the season his premises are surrounded by people who might be looking for a place to rent but also might be fantasising about the one they might one day be able to purchase. So, to have a picture and details of one’s attractively priced property in the window of such a place is to be almost perfectly focused on the right market. As well as this the agent has a good website that will show property off to advantage and provide the visitor with a video clip that gives a tour of all its aspects.

Add to this the fact that the agent employs plenty of people who will arrange a viewing at the drop of a beret so a person who has expressed interest can be put into direct contact with the property in the space of as little as half an hour. The sale of my apartment through this agent started off with everything going for it – it is well located (400 metres from the beach), in a small, delightful seaside town and but a few minutes walk from shops, well furnished, with a south facing balcony overlooking a communal garden and the price was pitched to make it significantly better value than comparable properties in the area: it did not take long before our agent was talking turkey (do the French parler le dinde?) about price with a French couple. Note, not British people; the supply of these seems to have dried up. I think it was an advantage that we were not present so visitors, in the company of an agency employee, could view at their leisure and not bother with the social niceties that arise inevitably when strangers meet in such a situation – particularly if they do not share a common language.

As I mentioned earlier, unlike UK practice the agent does not take his commission from the seller. The price you ask and get for your place is what you get, less a few charges that I’ll cover in the course of this article. The buyer pays the agent’s commission and, incidentally, most legal fees.

The Mandat de Vente

This is the first document to be signed: it confirms the business arrangement between the seller and the estate agent. It follows a standard format and defines the obvious things such as the seller, the property to be sold, the agent’s charges, whether the agent has exclusive rights to represent the seller, the duration of the agreement and so on. My agent did not require exclusivity which might well suggest his confidence that I wouldn’t find better elsewhere or may well be the norm in France It does not require the Notaire. Each page is initialled by the agent and the seller.

The Notaire


When you have got as far as an agreement on price one has to get involved with a Notaire, a lawyer. There is nothing quite like a notaire in the UK; he is a sort of super-solicitor. The notaire is an officer of the French government who operates independently and provides legal services to both buyer and seller. Being entirely impartial he is removed from the adversarial element that can often make buying and selling property in the UK stressful, because solicitors here seem to like a bit of a fight and that wastes time and makes them money. The notaire just wants to get the deal done while ensuring that all the complexities that French bureaucracy piles on the process are respected. Remarkably, notaires can also operate as estate agents and it is not uncommon to see windows full of property photos next to the entrance to their offices – this almost makes the process one-stop shopping.

Finding a notaire? My estate agent always uses the same one, who is local, but if you are selling privately just walk through your local town or scan the local paper and you will find one.

It’s not important but it is interesting to know that a notaire has the title of ‘Mâitre’ (Master) which gives one an idea of the status enjoyed by these people.

One has to accept the fact that France is run by bureaucracy and that quickly reveals itself once one moves beyond the decision to buy and a price is agreed. The bureaucracy seems to have anticipated every last detail of what has to be done and what might go wrong when two parties agree that a sale should take place. The downside of this is that time is consumed, the upside being that nothing should go wrong and if it does then the problem will quickly be identified. For example, the system does not encourage gazumping and will probably make it impossible to practise it.

Because my French, although adequate for day-to-day purposes, is not up to dealing with the complexities of such a transaction I chose to retain a UK based lawyer who specialises in dealing with transactions in France.

The UK based lawyer

There are quite a few who advertise on websites and in magazines. I chose my UK based lawyer because a friend had successfully used the firm which was led by a French lawyer with a French assistant. I found the two of them to be irritating at times because there were matters that arose about which they appeared to know very little and also because they often gave no warning of what lay ahead. It was rather like someone who tells you how to drive to a place but neglects to tell you that today there are major roadworks on that route. They should have prepared a checklist for their clients and they hadn’t. A typical irritation was for an assistant to tell me that the boss had sent me a letter but not to tell me that the letter contained documents for signature and had to be returned very quickly, failing to understand that people do, quite often, leave their homes to visit friends or to take a weekend break, for example. There were, however, no problems that would not have arisen in any UK legal practice and, on balance and primarily because the lawyers I dealt with were French and were comfortable with the notaire system, I would strongly advise using this type of representation if you are not very fluent in the language. Another advantage to me of using the French UK based lawyer was that the firm didn’t charge VAT which would have increased their fee by 20% of course. Don’t ask me why this was possible for them to do this because I just don’t know.

Once you have an agreement for the lawyer to represent you they will send you two copies of a letter headed ‘Terms of Engagement – Sale of … what it is, flat, house, palace and where it is’. The letter will say what they will do but not what they won’t do and therein lies the potential for problems. It tells you what their flat charge is and when they require you to pay it. They tell you their hourly rates for work over and above that which is precisely defined in the letter. Mine charged £1350 and it was payable in two stages. In the end I was not charged anything more than the flat fee apart from things like signed for postage. At the end of their letter there is a space for you to sign and date and thus confirm that you want them to act for you. One copy is returned to the lawyer and you are ready to go.

The lawyer will then require you to produce passport(s), birth certificate(s) and marriage certificates (if the sale is on behalf of two married people). These will be copied and returned. The lawyer will then pass this personal information on to the Notaire and will verify that the documents are genuine (lawyers can do this, they trust each other). This saves you from having to send the material by the ‘International Signed For’ service of Royal Mail or actually bringing it to the Notaire personally. My UK lawyer returned the documents to me safely.

The Compromis de Vente

When a buyer has come along and you have told the agent that you accept the offer the next document that one meets is the Compromis de Vente which is issued by the Notaire and basically establishes the facts as stated in the Mandat Pour Vendre and adds details of the purchaser plus a whole lot more. My UK solicitor first received a draft of this lengthy document and provided me with a step-by-step translation and an account of the items that she would query and correct. What follows refers to the amended final version that has been approved by the lawyer.

I haven’t sold a property in the UK for a very long time but I suspect that the Compromis has certain important differences from the documentation customarily used in the UK. The first one I noticed was the fact that my buyer was selling another property in order to buy mine and that if this sale did not complete then our deal would fall through. Another was that the buyer would successfully obtain a mortgage and if that was not obtained our deal would fall through. Such matters are referred to as ‘conditions precedents’ and, in themselves, will probably make you feel happy you engaged a UK based French lawyer with very good English. The details of the purchaser’s sale are provided in detail, to the extent that I was supplied with a copy of their Compromis de Vente and I could see to whom they were selling, how much they were getting and so on. It may be different in the UK today but when I was buying and selling private houses would-be purchasers would often try to keep such matters to themselves: they might admit that they had a house to sell, even that they were ‘in a chain’ (so they were de facto ‘conditions precedents’) but I don’t remember this kind of stuff appearing in legal documents. I would also add that my agent when he told me that he had found a buyer who would pay the price he didn’t mention the potential snags that would be a bit of a sword of Damocles suspended over our hopes. Fortunately everything went smoothly in that respect.

The buyer has a seven day cooling off period at this stage, but you, the seller, don’t.

The Compromis also lists all the Surveys that must be provided: these cover items such as Lead Poisoning, Termites, Asbestos, Energy Performance, Natural risks, Gas and Electricity and a professional confirmation that your floor area is the size you have said it is. The document seems to cover every known and foreseeable aspect of your property, yourself and your buyer. (It does not, however, appear to cover the colour of the walls or whether you get on with your neighbours.) Do not worry about these details, the Notaire will sort it out for you and pay the bills on your behalf.

I will deal with the business of what you might want to leave in the flat and include in the selling price, furniture, small objects and odds-and-sods, a little later but, for the moment, note that if you are going to make an arrangement about things that are not actually bolted down, referred to as ‘Chattels’, then there will also be included in the Compromis a list of those items and prices for each item. As I said, I’ll come back to this. I think you may well be surprised at what I have to tell you.

So you sign the final copy of the Compromis and so does your buyer who then pays a deposit to the Notaire; in this case the amount paid was 5% of the selling price. I suspect that 5% is the norm. The Notaire keeps hold of the deposit which, as in this country, will only be forfeited if the buyer well and truly welshes on the deal. Remember too those conditions precedents which protect the buyer if certain things go wrong.

Don’t forget your tax residency certificate which should be returned to the Notaire with the signed copy of the Compromis. Now, what is a tax residency certificate?

Tax Residency Certificate

Because the Notaire is responsible for withholding the French tax on any capital gain you may be liable to pay (and I hope you do make a capital gain because that is most satisfying) you must provide a certificate of tax residency from your own UK tax office. This tax certificate protects you from being charged taxes that are specific to French residents . The French have a special way of taxing foreigners and I will come to this very shortly. For the purpose of this article I shall assume that you are British and living in the UK.

You should find your tax office address on the piece of paper they send you when they give you your tax code number or ask you to pay them money or send you money that they owe you. Beware of time delays here and bureaucratic bungling. My tax office is in Salford and following my written request they produced a certificate within about 7 working days. It simply states that to the best of their knowledge you are a tax resident in the UK ‘within the meaning of the France/United Kingdom Double Taxation agreement’ and it says it in French and English. It does not state that their confirmation of my UK tax residency is restricted to any one year.

Anyone might be forgiven for believing that all tax offices followed the same pattern but the experience of a friend who was selling a flat in France at the same time as me shows this not to be the case. His tax office is in Leicester and after five weeks a reply to my friend was received from the Portsmouth office – don’t ask why it was Portsmouth, I cannot help you here. The wording was quite different from that used by Salford but it almost did the job – where it totally did not do the job was to limit the attestation of the tax residency to the 2010/2011 financial year. Their letter was dated 9 March 2011 and arrived on 14 March which was just 22 days before the end of the financial year. I think that most people in the UK know that selling a property is long-winded wherever you are so to have date-limited the document in such a way that it had a validity of only 22 days was just … what’s the term? … bloody stupid. Result? Friend had to write again and the reply, which took its time, then restricted the tax residency to the year 2011/2012. The certificate worked because the sale took place within that tax year but a certain amount of frustration was experienced and expressed by someone who said that he had paid UK income tax for 55 years and wasn’t likely to stop now. Salford didn’t bugger me about so what is it about Portsmouth?

The Chattel Problem

Earlier, under Compromis de Vente, I referred to those things that are not ‘actually bolted down’. They are referred to as biens mobiliers in the French documents and the nearest word to that in English is ‘chattels’.

I think that many people selling up in France probably do not want to have the burden of emptying the place and carting it all back home to … what? A garage already full of junk? It’s easier to do a deal with your buyer and leave it all behind for them.

The attraction of doing this is not just for the convenience; there is also a financial attraction because money you receive for chattels is not subject to French capital gains tax (I’ll come to the tax matter soon). So if you sell your French home and its contents (which you value at 20,000 euros) for say, 300,000 euros in total your French buyer should not complain if you tell the Notaire that the price of the property is 280,000 euros and the price of the chattels is 20,000 Euros: but that, as my Mother used to say, is as may be: putting a value on the things you no longer need is something of a trap. Read on.

This kind of deal used to be done under the counter so the seller would expect to receive the 20k in cash and the 280,000 euros would be the ‘official’, taxable, price but that is no more. Now the Notaire will write into the Compromis that the buyers agree to pay 20,000 euros for the chattels and the document will state that the purchase price of the property is 300,000 euros inclusive of chattels to the value of 20,000 euros. The tax people will respect this and will not levy tax on the chattel sum but first …

But first the Notaire must be given a list of the chattels each item of which must be valued professionally; this priced list must be included in the Compromis.

In the French property selling/buying industry this matter of valuation appears not to be widely known. What happened in my case was that I told the agent that I placed a very approximate value of 14,000 euros on the chattels and I gave him a list, unpriced, of the various items I was leaving for the purchaser. He, on learning that a list of priced items was needed but clearly not knowing that a professional valuation was needed, simply ran through my list and wrote in rough values for everything on it, making sure that the total came to 14,000 euros – and passed it over to the Notaire. The agent had obviously not got the message that the French taxman now wanted proof that the items had been correctly valued. No more overstating the value of chattels in order to reduce your tax bill; is that understood Monsieur?

My UK lawyer was told all about the matter of chattels and my 14,000 euros rough valuation but he didn’t know about the need for valuation either.

So then we had to commission a ‘judicial valuer’ or huissier, to visit the apartment and inspect every single item on the list. The Notaire found him for us. He would charge 307 Euros for this service and before he came he warned that these days secondhand goods were as moins cher as pommes frites and that I would inevitably be disappointed with his valuation. He was definitely a man of truth.

When I come to the matter of French Capital Gains Tax (see later) the nugatory benefit of selling my chattels will be revealed.

The Acte de Vente

We are coming to the end of the business, which happens when you and your buyer sign a document called the Acte de Vente which marks what we in the UK call ‘Completion’ but the signing of this, by both parties, calls for your presence in the office of the Notaire and this may not be convenient for you – it may be a long way to travel for such a short act. A few weeks before completion I happened to be staying in the apartment (clearing out all the items that were not bolted down but were not included in the list of chattels and packing them into the car – poor car) so, by arrangement with the Notaire I called in to see him and signed a document that gave him Power of Attorney for the purpose of signing off the deal: this is called the Procuration Pour Vendre and mine ran to six pages all of which, in true French fashion, had to be signed on each one.

So, you may either wait until you know when Completion will take place and make a special trip to be present for the signing or you may sign a Procuration Pour Vendre and do it in advance. I believe it is possible to avoid making a special trip by signing a Procuration remotely but this will definitely require the services of an experienced UK lawyer and you may still have to go somewhere like the French Embassy to do it: of course this will cost more. The personal visit to the Notaire is part of the tout compris service and adds nothing to the bill (which the buyer has to pay anyway).

I found the advance trip to the Notaire to sign the Procuration quite useful as he obtained from me all the details of my bank account so that he could ensure that my money would go to the right place. I am sure that anyone in the UK who owns French property has a French bank account as it is vital for things like paying the telephone and electricity bills, service charges and taxes all of which are paid by Direct Debit. Make sure you leave enough money in the account to cover these ongoing costs. The Notaire also sketched out on a scrap of paper how French Capital Gains Tax was calculated: it didn’t take him long. More on this later, too. Note: when the sale is completed do not cancel your French bank account and make sure you keep some money in it because you are going to need it.

The deal will be completed when both parties (myself being represented by someone in the Notaire’s office) have signed the Acte and the money due to the seller and the money due to the Notaire and to the Agent have been paid by the purchaser to the Notaire. And your money is then paid to you? Not yet, it is more complicated than that.

The Décompte Vendeur

When the Acte de Vente is signed all the various bits and bobs, the minutiae of the process, have been sorted, done and dusted, and appear in a final statement called the Décompte Vendeur (Seller’s Detailed Account). The sums of money in respect of tax and the management charges (if relevant) appear in this account. Then there are the odds and sods of things like the honorarium that has been paid to the managing agent for supplying a report on all the charges that have been applied to the property over the years; the fee to the huissier for the chattels valuation; the diagnostics divers (all kinds of matters that had to be reported on by experts – things like asbestos, lead, gas and so on); the fee for my fiscal representative (see later. under French Capital Gains Tax) and the Capital Gains Tax.

At the bottom of the account is the figure you have been waiting for: the amount that that will be paid by the Notaire into your bank account: fair compensation for giving up all the benefits that you sought when you first bought your property.

At this point there are tax matters, both French and UK, to be considered.

French annual taxes

As you will know, the French levy two forms of tax upon property owners. There is the Taxe d’habitation (tax on residency) and the Taxe Foncière (tax on property) and you will have been paying these every month by Direct Debit. The law is that if you have owned property in France for any time at all within the current calendar year then you are liable to pay Taxe d’habitation until the end of the year – even if you don’t set foot in the country and even if you sell it one day after the year begins. Taxe Foncière ceases when the sale is completed. Following the pattern described above the Notaire fixes it so that the buyer pays the seller the Taxe Foncière due from completion date (this payment is fitted into the final calculations that appear in the Décompte Vendeur) and the buyer leaves the Direct Debit payments for both taxes standing until the year end when both will stop.

French Value Added Tax

I am very shaky on this subject because although I am assured that I must have paid VAT when I bought my property (off-plan) I was unaware of it as it was so cunningly concealed. I understand that if one buys a property off-plan, or brand new, there is an element of VAT within the price. If one sells that property within five years and there is a gain then a charge will be made for the VAT that would have been on that gain as though that gain was part of the original price. So, if you had paid 300,000 euros for a property and, say, two years later you sold it for 400,000 euros you would be charged for a VAT element that was within the 100,000 euros. So it is as though you had bought the place for 400,000 euros. Wow! And then there is Capital Gains Tax to account for. Wow! Wow!

I had owned my property for 12 years so did not have to pay this tax when I sold.

(I strongly advise that you seek more information on the matter of French VAT – or IVA as they call it there if you are thinking of selling a place that you bought within the past five years)

French Capital Gains Tax

We now enter waters that are very muddy in terms of the ordinary person’s ability to understand matters financial.

If, on selling your property, you will be making a profit then the French will want their tranche of that gain. It is calculated on the basis of how much you paid for it subtracted from how much you are getting for it. If you are selling within five years of buying then they will hit you for 19% of the gain. If you have owned the place for longer they reduce the tax by 10% for every year it has been in your possession. So, for me, after twelve years, the bill was never going to be very high.

However, the French have a very neat way of screwing a little more money out of its non-resident property owners: if the sale price is greater than 150,000 euros they require one to appoint a ‘fiscal (or tax) representative’ to calculate the CGT you will have to pay and to report it to the Notaire so that he may deduct it from your money. The fiscal representative enjoys a status similar to that of a Notaire in that the French government trusts them absolutely to get it right. My UK lawyer suggested a few of these tax representatives and I chose one at random; the Notaire fixed it all up for me. Note: French folk are not required to appoint tax representatives. I wonder, do we British do anything similar to foreigners who sell property they own here?

My tax representative took up very little of my time, or hers I suspect. My hope was that I would manage to get her to reduce my CGT obligation by showing how much I had spent on improving the place and so reducing my gain. Their system gets over the inevitable hassle arising from my presenting them with invoices and receipts for all the money I had spent on improving the place and arguing that these should be used to reduce the final gain calculation. They really don’t want to know about this but simply inflate the original purchase price by 15% and base the CGT calculation on this. My irritation over this was assuaged somewhat by my realisation that the 15% would be much larger than the total of all the bits of paper I had been collecting and cherishing over the years. Forget the arguments over what counts as an improvement. 15% would easily cover the lot.  *See the end of this posting for additional information on this.

My French CGT charge came to 3698 euros. My fee to the tax representative was 1,550 euros: I thought that to be a lot of money. The Notaire, you may remember, showed me the calculation on a scrap of paper, taking just a few minutes to do it. Money for old rope, what? That aside, the total cost of the CGT plus the fee for working it out was not huge in the face of the gain I had made.

I return to the matter of those chattels and their valuation. I had placed a rough valuation of 14,000 euros on them. The huissier valued them at 6,260 euros and had charged a fee of 307 euros for arriving at this figure. This had reduced the taxable amount by 6,260 euros. I think that I spent 307 euros in order to save about 70 euros. Not a good deal. No-one, my UK lawyer in particular, had even mentioned CGT or suggested that I obtain an estimate of what it might be at the time we were talking about valuations and huissiers. You, dear reader, may learn from my experience.

Advice to would-be sellers of property in France: set a price for your property and all that it contains. Think of the contents as a gift to the good people who have done you the favour of buying your property. Don’t even mention chattels to the Notaire ... unless you believe that your contents are worth piles and piles of money in which case you might start by obtaining a per-item valuation from your local huissier.

Or just take all the stuff home and render your garage entirely unuseable.

UK Capital Gains Tax (CGT)

The British tax system demands its share of any gain you have made. It pays no heed at all to the time for which you have held the property. They will simply want to know how much you paid at the beginning and how much you received when you sold. They will allow for the CGT you paid the French and take into consideration money spent in improving the place. If you have made money on changes in currency rates euro/£ then this will be added to your gain. They are far more grasping than the French and that is saying something.

But, I hear you ask, how will the UK tax people know that you have made this gain?

Well, if you are wise you will tell them. You will appoint an accountant if you haven’t one at present and you will lay all before him and let him make the declaration and work out the CGT to be paid. But what if you don’t tell them? The French tax authorities will tell them. They have a bipartite arrangement which ensures that no-one escapes (go back to where I mentioned tax residency certificates).

I met a fellow at a social gathering a couple of months ago who had recently sold his place in France. He had paid his French CGT and that was the end of the matter as far as he was concerned. No, there could not possibly be any UK CGT obligation because he had sold to someone who was English. I tried to steer him towards a more rational approach but he would have none of it. Poor fool!

I have followed my own advice very recently and my accountant told me that I should put aside £10,000 to cover the payment I shall have to make to Her Majesty’s Revenue and Customs. Compared with what the French have taken, including the fee of the fiscal representative, it’s more or less double, so the French system is kinder. It is one of the quirky aspects of British life that since my taxable gain was made early in the 2011/2012 year I shall not have to pay the CGT until January 2013 so it’s Premium Bonds for me. Let’s see if there is a God, shall we?

RETURNING TO THIS SUBJECT a couple of months after posting this piece I have to return to the matter of UK capital gains tax where I now discover there is more to the matter than I was led to believe. CGT is also levied on any gain made as the result of change in the exchange rates between France and UK. When I bought my apartment in France the Euro was fairly cheap when bought with the £; in the twelve years or so following the Euro has become very much more valuable. This simply means that in currency terms I bought low and sold high and therefore I made a gain out of the currency as well as a gain out of the increased value of the property. The impression I get is that one cannot minimise the effect of this by staggering the timing of turning your Euros into £s over a period of years (ie slowly using up one’s CGT exemption of £10,600 pa. The tax man’s approach is very simple: he will take the sum of money you paid for the property at the time of the purchase and will convert it to £s at a rate operating at that time. He will then take the amount of Euros you receive from the sale (net of deductions made the Notaire) and convert that to £s at whatever rate applied on the day the sale was completed. He will deduct the first figure (in £s) from the second figure (in £s) and base the tax charge to you on the difference. How will he obtain the information on which to make this calculation? From you and from the French tax authorities.


Try to keep in mind that your country needs this money more than you do.
(Sept. 6th 2011)



Handling the Money

After about two weeks of being cuddled by the Notaire your money will be paid into your French bank account. By then you should have set up an arrangement with one of the UK companies who will handle the receipt of euros, translate them into sterling at a rate that is more generous than any British high street bank and put them into your UK bank for you to do with what you will. I use No.1 Currency, based in Edinburgh whose website is www.no1currency.com and have done so for several years: they are very reliable. Your French bank will require a letter from you giving all the details of your chosen company and the sum that is to be transferred. Don’t forget, as I told you, to leave some money in that account for matters you may expect – such as those taxes for which your Direct Debit arrangements must be continued until the year end - and those that you don’t. See below if you are selling a property that is within a larger complex and you have to pay a share of maintainence costs.

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Complications arising if your property is within a larger development


If your property is part of a larger development, such as a block of flats, you will have been paying a service charge plus your share of other one-off charges for maintaining and improving the whole development. The management of this ‘co-propriété’ is carried out by a specialist company, called the ‘managing agent’, that might very well also be an estate agent. At the beginning of the calendar year they tell you what your service charge will be and then, in my case anyway, they send a bill twice a year. If there are any one-off charges, such as painting the exterior, erecting a fence and so on, they will add your share to the bill. Your share is based on the surface area of your property in relation to the sum of all the surface areas within the development. When you sell such an apartment the purchaser will pay to the Notaire the service charge due from the date of completion to the end of the year: the Notaire will add this sum to the final amount he will send on to you and you will then pay the managing agent in the usual way, until the year end. If at the time of sale you owe money for the service charge the Notaire will deduct the sum from the product of the sale and will pay this to the managing agent. It seems very complicated but what it all boils down to is that the Notaire makes sure that the seller pays whatever should be paid up to the day of completion and the purchaser picks up the tab for what follows. For convenience the seller will continue to pay the managing agent until the year end but will have already been paid by the purchaser so it is just a matter of bureaucratic convenience. Just make sure you pay for nothing after the year ends – and that goes for taxes as well.

*Additional information on French Capital Gains Tax (following feedback on my original posting)

There are circumstances when the 15% allowance on top of the original price paid works against you when you sell. If you have bought a delapidated property for a very low price and then have improved it yourself over, say, two or three years and then want to sell it fairly quickly for a price that reflects all the work and money you have put into the place, you may face problems with your fiscal representative and hence with the CGT to be charged. The essential thing to remember is that allowance is not made for any work you have done yourself, nor for any work done by non-registered builders, nor for any materials you have bought yourself or have been bought by non-registered builders. So, if you are selling within five years of purchase and have done the classic 'bought a wreck, turned it into a palace by the sweat of my brow' almost certainly you will be taxed at 19% of the difference between your sale price and your purchase price increased by 15%. The only way CGT can be avoided is by being very patient and waiting until more that 12 years have passed since buying so that the CGT has been whittled down to zero by the 10% reduction per year rule. Of course, if you have only employed government registered workmen to improve the property then you simply provide the receipted invoices: if they total more than 15% of the purchase price the fiscal representative is more or less bound to accept them and to make allowances for them in the CGT calculation. Note that the UK taxman will pay no attention to how long you have owned the property and will sting you as hard as he can!
Remember: I am not professionally qualified to give you advice and what I say here is based only on my own experience of what I have done and what I have researched.