Capital gains tax on adjoining gite

11 Replies

Having sold, prior to completion, the attached small house of our main and only residence, we realise that we have to pay capital gains tax. Same house number, you could wander through from one to the other internally - but for 8 weeks or so in the summer it was a gite and because I have obviously declared the income of this, the notaire suggests we have to pay capital gains on this. It's not easy to work out as we bought it all together, eg. Main family house with attached small house. And we have used the small house as our own house, to sleep in and eat in etc but the sticking area is the two months a year we tried to let it out as a gite. I'm not really questionning the french law - it did surprise us to learn that our only house qualified for capital gains but am wandering if anyone else has been in this position and if there are any other pointers we should consider. We know that we need to gather factures of official work done by registered enterprises to offset. 34% we understand the tax to be. Many thanks for any other info or thoughts.

Replies

hazy2 1405987076

When we sold our first house and attached gite we did NOT have to pay CG or Plus Value because all the gites utilities came via our house. It did not have its own water or electric meters or fosse


I made it clear to the Notaire that the gite was a DEPENDANCE and it shared our fosse,water and elec supply. It was a registered gite and our Taxe Fonciere and T Hab papers showed it was a house and a dependance. I had a Siret No and years of paperwork showing its use as a gite.


I can only guess that your gite has its own meters.  If not, then you must question your Notaire, as he is wrong.


With our second house and attached gite, we have the same arrangement as we shall be selling it soon.

foyboy 1405987231

It's not your only house though, is it. If it can be divided up to sell one part it must be two dwellings. 

frenchbeads1-425526 1406015836

Thank you Hazy2 for your thorough answer and description of your experience. I will look at the paperwork for the description of the "gite" also with the tax foncieres and habitation. It has the same water supply - that's one of the things that weve had to sort out in order to separate it. But a separate electricity meter. We have had to block and separate the space obviously but prior to this, we would go from one to the other and use the space to live in as part of our home.


Appreciate your reply and taking time to explain - thank you.


 

frenchbeads1-425526 1406016557

Hazy2 - i forgot to mention that the notaire quoted from his "book" a paragraph which stated that if the dwelling had been rented or even occupied by a family relation, without them paying for it, then this was not classed as a permanent residence and so therefore, a second house effectively and capital gains is paid. In other words, if you have declared income etc as a gite then it is clearly a capital gains situation, apparently. There is obviously interpretation in this. He just explained that if the case was controlled in the future, we would need to be sure that we had proof to make capital gains not applicable. 

buster-784461 1406038366

Get him to look in his book to see if it stipulates how many weeks of renting out in a year makes it not your principal residence!


I rent my whole house out during summer! - its my principal residence.

Emu-408495 1406039357

If you have chosen to divide your main residence into two houses and have sold one of the dwellings then there is no question that you are liable to cay CGT in the same way that anyone selling a 2nd property would be.  The notaire will calculate the amount of tax due.

hazy2 1406040501

I have just read the first line again of your post and realise that you are selling your attached dwelling and not the whole property. I read your post too quickly obviously.


And as you are selling it as a separate dwelling, then it looks like CG will be due. As your properties are now 2 dwellings then yes.


But surely you must tell your Notaire that the smaller one you are selling is the one you use as your main house. 


I presume you are fiscally resident here and fill out tax returns each year.

frenchbeads1-425526 1406041242

Thank you for all the answers above. We hadn't realised that CG tax applied in this case but will continue to let the notaire advise us and pay it! I suppose it's better to pay now than get controlled or a fine at a later date. Thanks again to all who replied.


 

Scarlett-397347 1406074839

I don't know if this rule still applies, but when we sold a gite in 2010, we did not pay any plus value as it was within the business which had to be a minimum of 5 yrs. Although the previous one we sold we did not know this & sold 6months before the 5yr period, thus ending up with a huge plus value bill. 

tmbfca 1406078338

I don't know all the plusvalue rules, but in the UK you apportion the costs using a fraction based on the before and after market values and also time-apportion the use between private residence and business use. Intentions when you first bought the property are also taken into account. I suggest you discuss these factors with your notaire. 

rance-781573 1406104079

UK and French regulations concerning cgt (plus value) should never be thought of as having the same rules.

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