The headlines have been awash with news that owners of second homes in France whom reside outside of the country are set to be hit with mighty tax bills. As always, the press has played hard on the scary side of things and it’s almost as if the new tax laws are already in place and any foreign owners are doomed.
Well this simply isn’t true. Firstly this is a proposed change in the tax law; it hasn’t come into force as yet so headlines such as “Britons with holiday homes in France hit with massive tax hikes as president Hollande tries to plug £8bn hole in budget” from the Daily Mail are simply scare mongering.
Do you remember last year the hype over Sarkozys plan to tax holiday homes? Once again the press was in outrage and the headlines bore doom and gloom, announcing that British owning second homes in France would now have to pay mighty tax bills. No more than a few weeks after, the proposed tax law was disregarded as the French government received pressure from various sources and could have fallen foul of EU law by discriminating against residents and non-residents.
So when reading the press, remember not to believe everything you read and keep in mind some of these facts:
1. This is a proposed law, it is not as yet in force and therefore no one is affected at the moment.
2. This isn’t a law to make non-residents pay more than French residents. No-one is saying that France doesn’t want foreigners owning property here. In terms of the capital gains tax it would actually bring taxation into line with what the French pay. The additional tax is a social charge which helps “plug” the French deficit and this is already paid by those who are taxed in France.
3. Francois Hollande is a new president who is a looking to make a name for himself and is trying to keep his promise to voters regarding taxing the rich. Having his name splashed all over the international press is a victory for him. Once he’s finished his publicity stunt we’ll probably hear no more.
When we asked one of the agents we know who frequently deal with non-resident customers for their thoughts, they commented that they’d heard “lots of wild rumours, the usual thing” and that the only problem they’d had with worried customers was “buyers worried that the sellers might change their mind due to the extra tax to pay”!
Hopefully the press will calm down and will return to reporting factual news rather than hyping things up and telling everyone that they are doomed.
To find out more about how you can buy in France with a French mortgage, please visit French Mortgage Direct for advice and specialist mortgage brokering.