property tax

[mand]

I understand there is a stealth tax in France that hit's those owning property worth more than €790000.00

Does anyone know how this works?
Does it refer to a single property that is over that limit or is it if you have a few properties that add up to more than the threshold?
Any idea's how much the tax percentage is?

[sue and paul]

http://www.frenchentree.com/fe-legal/

You might find the answer on this site

[polremy]

I understand there is a stealth tax in France that hit's those owning property worth more than €790000.00

Does anyone know how this works?
Does it refer to a single property that is over that limit or is it if you have a few properties that add up to more than the threshold?
Any idea's how much the tax percentage is?

I've never heard of that.
Not going to lose sleep worrying about it though - not being rich does have advantages.

[thumbelina]

I've lived here for quite some time now, and I've not heard of it, Mand.

I'd be interested to hear if you find anything out, though please.

[Nigel]

I wonder if you are referring to the Wealth tax .....chargable if all your assets exceed 790000€....

[mpprh]

I wonder if you are referring to the Wealth tax .....chargable if all your assets exceed 790000€....

I think there are some exemptions for your principle residence.

Peter

[mand]

thats the one wealth tax...i have found on a site which is 3 years old now that if it is over the threshold you would pay 0.55% but no idea if this figure increases or how it works for your principle home

[blackduff]

I've lived here for quite some time now, and I've not heard of it, Mand.

Thumbs
Give a ring to Segolene Royal (sp?) and she can give you some hints about this wealth tax. She found out this law and how it works. It worked fast for her.

It's surprising that the amount listed is for just the rich. I do know a few Brits who sent money to the coffers in Paris and they're not rich.

I asked about a dozen French about this and all of them said it's not for them~it's for the rich.

Blackduff

[thumbelina]

I found this on French entree, but, again, it is dated 2005.

Wealth tax in France - a tax on your fortune
Do you qualify for French wealth tax?
Wealth tax, or 'L'impôt de solidarité sur la fortune' (ISF), is a tax on asset values that strikes fear into the hearts of some expatriates.

Wealth tax does not exist in the UK, and the concept sometimes comes as a surprise to the British, since not only are you paying an annual tax on the value of assets that you built up out of your taxed income, but the authorities also oblige you to list everything you own, which can leave some people feeling that their privacy has been invaded.

However, this is a tax about which French public opinion feels strongly and anyone who followed the various debates on the 2005 French budget will realise that any attempt to reduce wealth tax is considered to be a political disaster, even for the current government which has a large majority. For the first time in seven years, however, the French Parliament voted to increase the various tax bands in line with inflation, thereby halting the gradual increase this tax has seen in recent years.

The recent rise in French and UK property prices, particularly in the south of both countries, means that the number of people liable to wealth tax has increased dramatically, but if you think you fall into this category, there is no need to worry unduly. We at Siddalls have been contacted by ex-pats who have hidden away assets in complex offshore trusts, in the hope (with no guarantee, since there is no trust law in France) of avoiding wealth tax, only to find that the annual cost of running the arrangement was more than the tax saved.

In fact, in most cases, the wealth tax bill turns out to be perfectly reasonable and it is not worth going to any major effort or expense to avoid it, however unnerving the concept may seem. It is important to take suitable advice as to what your bill - and for that matter your total tax bills - in France will be, before making any decisions.

How the tax works
Wealth tax is payable by any 'household', resident of France, whose combined worldwide assets are valued at more than 732,000 euros on January 1, 2005. Your 'household' includes spouses and dependent children, and it should be noted that stable unmarried couples are also taxed together. Non-residents of France may also have a wealth tax liability, but only on their French property assets.

The 'values' of your assets are the sale or surrender values as at January 1, 2005, and the onus is on you the taxpayer to put the correct current market value on your assets. You can reduce the value of your principal residence by 20 per cent and can value your home contents at either their real value or set them at 5 per cent of your total assets. Any liabilities you have are then deducted, such as outstanding loans or tax bills to be paid.

Very few assets are exempt from wealth tax, with the main ones being antiques, fine art and 'business assets'. The rules are relatively strict as to what defines a business asset, and adherence to the rules is heavily controlled.

Once you have worked out the value of your taxable assets, wealth tax is pure self-assessment. You complete a specific declaration form, calculate your own tax bill on the form and then send it off, by June 15 of the year in question, with a cheque.

There are various minor complications with the calculation, of which the most irritating is that, once you have worked out your tax bill, you can then take that bill off your asset values as a liability, so you have to start the calculation again!

However, basically, tax is calculated on a banded system as follows for 2005:

Taxable asset values (euros) Percentage tax

Up to 732,000 0
From 732,001 - 1,180,000 0.55
From 1,180,001 - 2,339,000 0.75
From 2,339,001 - 3,661,000 1
From 3,661,001 - 7,017,000 1.3
From 7,017,001 - 15,255,000 1.65
From 15,255,000 1.8

Thus, for a household with taxable assets of 1,000,000 euros, the bill for 2005 would be 1,474 euros. At this level, and with suitable planning, it is normally possible to ensure that your overall tax bills remain perfectly acceptable in France. On the other hand, for estates worth in excess of £1,000,000, the bill begins to rise relatively quickly and planning is essential.

New tax treaty
The French Government has recently agreed to add into the provisions of the new double tax treaty with Britain, signed in January 2004, a temporary exemption from wealth tax for British nationals resident of France, of any 'property' outside France, during their first five years of French residence. Bear in mind, however, the new tax treaty has yet to be ratified, so it will not be in force for some time yet and the wealth tax exemption will only begin from the year following the year of ratification.

Rupert Holderness is General Manager, France, at John Siddall International, Independent Financial Advisers to British expatriates in France: www.siddalls.net

and this on French property.com

0.1. Liability to Wealth Tax in France


The French wealth tax is called Impôt sur la solidarité fortune (ISF).

It is a tax that has attracted a lot of publicity abroad, much of it misinformed, because it is paid by relatively few people (under 500,000) and the amounts paid are generally very small.

Nevertheless, with the increase in the value of property in France in recent years, it is a tax that is catching those who may be 'capital rich’ but ‘income poor’ and who may, therefore, find it difficult to pay the tax.
There is an exemption from the tax on those assets located outside of France for five years, for those who become resident in France after 6th August 2008


Thus, for the first five years of you becoming resident in France, you will only be liable for the wealth tax on those assets located within France.

After this date, the tax is payable if you have total worldwide net assets in excess of €790,000, a threshold that is inflation linked.

Taxes due, bank loans and other debts are all deductible before the calculation of net assets.

If you are resident, there is also a 30% allowance against the value of your principal home. This concession does not apply to second homes.

The applicable date for determining net assets is 1st Jan each year.

Accordingly, whatever may have transpired in the household during the year is not applicable for the purposes of assessing liability to the tax, as it is based on the situation as at the beginning of the year.

The extent of your liability will depend on whether or not you are resident in France.

* Resident - If you live in France then the whole of your worldwide assets must be taken into consideration for the purposes of the tax.
* Non-Resident - If you do not live in France, then only property assets actually in the country are considered.

As a result, the value of your second home in France will be used to assess your liability to wealth tax, even though you may not resident in the country.

In determining your wealth the total net assets of the whole household are taken into consideration.

It is for each household to assess and determine for themselves whether or not they consider they are liable to pay wealth tax. There is no need for a professional valuation to be made.

To some extent, therefore, there is an element of voluntarism in the declaration of tax liability!

However, in the event that the tax authorities decide that you are liable to pay wealth tax, they are entitled to collect arrears of payment over the proceeding 10 years.

The French tax authority does have sight of all property transactions in the country so will be aware of the price you paid for a property.

In relation to residential properties that are let, the authorities would ordinarily accept valuation of such a property on the basis of capitalisation of the rent at the rate of 5%. Commercial properties can be capitalised at 8%.
Top Tip!
If you make a French wealth tax declaration the tax authorities will have an expectation that a declaration will be made in subsequent years. If you do not, they may well require proper verification of the change of circumstances.

Copyright © French-Property.com

[mand]

thanks for that...i didn't know they would hit us for property abroad so we would be sailing a bit close to the wind...we were planning on renting out our UK property when we move over to France later this year