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Discussion Starter · #1 ·
Hi all - I am retired and currently selling an overlarge house and intend to travel for a while in a campervan

My thoughts are to buy a smallish property in uk and another in France or Spain with the idea of having a base if I get tired of travel and also that I could let off as holiday lets to provide some extra income to my small pension.

Has anyone done anything similar?

I am probably thinking of remaining as a UK resident for the present, at least until I get my bearings

What are the tax implications in this?
 

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Hi there,

I looked into this a little while ago, but decided against buying in France, so haven't got any experience to back it up. However, what I found seems to be that if you purchase in the EU and make money from the rental, but are resident in the UK, you can register to pay tax in the UK on the income you make.

Depending on your other sources of income, this may be below the threshold for paying income tax, so you may owe nothing at all! :cool:
 

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On a side note, I live in a quite expensive part of France, where property prices rival those in the more expensive parts of the UK, but rental is much lower. If it's an option, I'd say buying in the UK to rent would get you a getter income for your investment.

It sounds like that wouldn't be your main objective, but I thought it was worth mentioning anyway. Good luck with your travels, sounds like a great adventure!
 

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I suspect you won't get much choice. If you have always lived in the UK and still own property there, HMRC isn't going to let you go that easily. You would have to show that you are moving to a permanent home in another country, which is henceforth going to be the centre of your personal and economic interests. If you're going to be travelling you won't be establishing a new 'centre of personal and economic interests' so you will remain UK resident for tax purposes.

However, if you could choose, then the answer would depend entirely on your personal circumstances - the source of your income, the amount, how much you have in savings and how it's invested, who provides your pensions, are you early retired or over state retirement age, are you single or married, etc, etc, etc. Very generally speaking, most people pay lower income tax in France than they would in the UK, but overall, unless they're UK state pensioners on lowish incomes, they tend to give more to the French state overall because of the other taxes, which you might or might not be liable for depending on your situation. There's also the healthcare question. And then you'd have to consider the implications of owning and renting out properties in countries where you are not resident.

There is no one size fits all answer and especially if you're in the higher tax bracket, you would benefit by investing in professional advice.
 

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Discussion Starter · #5 ·
Thanks - what were the reasons that swayed you against buying in France, and do you still have somewhere in the UK?
 

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Discussion Starter · #6 ·
Thanks ET :) you posted whilst I was typing :)

I think at present I want to stay a UK resident, so if I bought say, a barn in France and restored it with the intention of letting it where would I pay tax, or would I be taxable in both countries
PS my current penison is minimal and I am not early retired - any property would be my main source of income
 

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Hi there,

I looked into this a little while ago, but decided against buying in France, so haven't got any experience to back it up. However, what I found seems to be that if you purchase in the EU and make money from the rental, but are resident in the UK, you can register to pay tax in the UK on the income you make.

Depending on your other sources of income, this may be below the threshold for paying income tax, so you may owe nothing at all! :cool:
Sorry but I don't think this is correct. :(

My understanding was that if you live and pay tax in the UK, and also earn rental income from a property in France, you are obliged to pay tax in France as a non resident at a rate of 20 per cent of the profit.

As a UK taxpayer you then declare your global income to HMRC, but if you have already paid tax on the income in France the double taxation treaty will be applied to ensure that you don't pay tax twice.
 

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Hi,
The problem in France with buy to let is that rents are low compared with the UK ;there is a mass of legislation and red tape , nearly all of it heavily in the tenant's favour. It takes a long time and much legal expense to get rid of a bad , non paying tenant (of which there are many), eviction can take over 3 years. As a non-resident your taxable rent would be subject to a set french rate of 20% income tax , plus 15.5% social charge.
Much better in the UK , I would think.
 

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The correct and strict answer to the question is " dead, in a coffin". You will thereby avoid taxes, but not perhaps, on your estate! Everywhere else you will almost certainly have to pay taxes when alive.

DejW
 

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Another random thought on this - owning a holiday home in France means you will have two property taxes to pay in full each year (owner's tax and occupant's tax) whether you spend any time there or not and whether you get any income from it or not. So you would need a minimum amount of rental income just to break even.
 

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Hi again,

I decided against buying for various reasons, but one of them is the (relative) affordability of rental compared to high costs of purchasing a property. Also, I didn't want to sell my UK property since I can get enough rent from it to pay the mortgage and my rent in France! Finally, I am not sure how long I want to stay here, so didn't want to commit to buying here, especially when it essentially means making a huge investment in Euros with the relatively unstable Euro at the moment (which was a bit more topical when I made the move over a year ago.)

As for the tax question, I have read conflicting things, you would have to do your own research. I do recall finding that information that there was some sort of agreement within the EU, although what I wanted to know was the opposite (letting in the UK whilst living in France). However, a quick google search seems to show that you should pay the tax locally, but then it can be offset against UK tax: http://www.hmrc.gov.uk/cnr/revised-guidance-on-letting.pdf
 

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Another random thought on this - owning a holiday home in France means you will have two property taxes to pay in full each year (owner's tax and occupant's tax) whether you spend any time there or not and whether you get any income from it or not. So you would need a minimum amount of rental income just to break even.
Not entirely: if the OP has a tenant in as at 01.01, it will be the tenant who pays the Taxe d'Hab (occupier's tax), as long as it's not just a short-term holiday let.

h
 

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If you're early retired you are almost certainly best off staying resident in the UK. Try googling threads on 'inactifs' and 'healthcare' and 'France'.
Doh, just reread this and realised I've lost the plot - I misread your post and thought it said "I am early retired". Ignore that post :eek:
 

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Not entirely: if the OP has a tenant in as at 01.01, it will be the tenant who pays the Taxe d'Hab (occupier's tax), as long as it's not just a short-term holiday let.

h
Absolutely - but the OP did originally say
HMy thoughts are to buy a smallish property in uk and another in France or Spain with the idea of having a base if I get tired of travel and also that I could let off as holiday lets to provide some extra income to my small pension.
 

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Absolutely - but the OP did originally say
That's true - but there was a prelim discussion about this in the Bistro about the OP's proposals, so I was referring obliquely to that.
 

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Discussion Starter · #17 ·
Lots of interesting stuff there - thanks and keep it coming

It sort of appears from what you are saying that if I retained a uk property which was let out (either holidays or short term) then I would pay UK tax on unearned income in the UK? But I would be able to put any expenses against the income earned?

And the same would apply in France?
 

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OK, I have little or no understanding of UK taxes, but as an accountant let me pass on one word of wisdom from my business school days: You should NEVER take a decision based solely on the tax aspects of the matter. There are far too many other things to take into account before making a financial decision of any type.

Very generally speaking, when it comes to international taxation, you normally won't pay income taxes to two different governments on the same income source. There are tax treaties and ways to credit one country's taxes against another's. But it can get really complicated pretty quickly.

Taxes related to real property (i.e. land and buildings) usually are paid to the country in which the property is located. But you may have to report the income to both countries (i.e. the one you are "tax resident" in and the one where the property is located). This is where it pays to know how those tax treaties work.

And different countries have different ways to determine if you are "tax resident" there. France has it's own rules - three criteria, and if you fulfill any one of them, you are considered tax resident in France. Many people will cite the "183 day rule" (i.e. if you are physically present in a country for 183 days in the tax year) but that is only a rule of thumb and may or may not apply in any specific case. In France, the 183 day rule could come into play if you (or the fisc) is asserting that your "main place of residence" is France, though it is entirely possible to be considered tax resident in France with less than 183 days of presence here.

Any tax determination involving the UK is a little complicated, if only by the fact that the UK tax year runs from April 5th. Many other countries (including France) tax individuals on a calendar year basis.

No specific advice on your situation, just a number of "gotchas" to keep in mind.
Cheers,
Bev
 

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Lots of interesting stuff there - thanks and keep it coming

It sort of appears from what you are saying that if I retained a uk property which was let out (either holidays or short term) then I would pay UK tax on unearned income in the UK? But I would be able to put any expenses against the income earned?

And the same would apply in France?
Now this bit I do know.... Yes, you continue to pay the tax on that in the UK and yes you can offset any expenses (so claim the tax back on that amount, not claim back the whole amount!) Most lettings agents will tax at source, then you have to claim back the difference.

I have no idea whether this would be the same if you were paying tax on a property in France I'm afraid.
 

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Ho-ho; in France, it's not quite the same deal .... there's a surprise! It depends upon HOW you're letting; and then, depending upon the regime that suits you best, there are either fixed percentages, or real costs, to be deducted (by the Fisc - not you - you declare gross), before your tax liability is calculated.

That's why your fiscal domicile is important.

Personally, I think France favours better than the UK those in the low-middle income bracket, but I have only gut feeling to back that up.

h
 
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