French Property Purchase Considerations
Some people dream of escaping the UK for a better life in France. However, most individuals choose to remain in the UK, or the very least keep a property in the UK, and purchase a French property mainly as a retreat in which to relax or to pursue their hobbies.
In any event, purchasing a French property is a significant commitment in relation to which you are likely to benefit from advice at the outset and at periodical intervals thereafter.
Common Structures for Buying French Property
Here we set out the common circumstances under which Britons buy and are deemed to hold property in France. The manner in which UK-based individuals are deemed to hold French property and their rights and obligations in relation thereto are to a significant extent determined by their matrimonial regime, as determined at French law.
Buying French Property – Moving to France to Live
Obviously, if you are considering purchasing a property in France with a view to residing in France permanently, then there will be far more variables to take in consideration, particularly if you are also setting up a business in France. You will need to consider the amenities that you will need in your vicinity. For instance, if you have young children, you will need to consider schools and transport links. It is wise to plan your finances and have a realistic view of the income you will need to live on.
You will need to consider the implications of French residency and tax issues, as well as the structure of any business you may be thinking of setting up or acquiring. It is also worth considering in advance whether there are any tax planning opportunities which should be taken advantage of prior to moving to France.
Buying French Property – Retiring to France
Again, there are a host of considerations to be taken into account, such as location (including proximity to transport links), ability for family to visit, medical cover, and treatment of your income and/or pension. It is also wise to consider the tax treatment of other assets, and whether you can take advantage of tax planning opportunities prior to moving to France. Finally, it is worth giving serious consideration to issues surrounding residency and domicile, and whether it is indeed in your best interests to retire permanently to France.
Buying French Property for Leisure and Holidays
This situation applies where your main residence is in the UK and you are considering buying a holiday home in France.
In this case, all of your assets will be governed by English law, apart from your French real estate, which will be governed by French law, both for succession and taxation purposes. Therefore, you will need to understand how French succession and inheritance tax rules will affect your French property and how this will impact upon the succession and inheritance tax planning you may have in place in England.
You will need to understand French capital gains tax and sometimes French VAT, as well as how the rules on French and English taxes interact, particularly from the point of view of capital gains and inheritance taxes.
Taxation for Owners of English and French Property
We are able to advise you on French tax and succession issues and give you an overview as to their interaction with English tax and succession issues. However, for more detailed information concerning solely English tax and succession issues, we suggest that you consult your accountant and/or a specialist UK tax lawyer.
The manner in which you structure your French property purchase will also depend on your own individual circumstances – whether you are single, married, separated, divorced, or widowed. It will further depend upon the extent of your assets and where they are located. Additional considerations include whether you intend to remain English resident and/or domiciled, or may potentially become French resident and/or domiciled.
Residency applies to where you live and domicile is generally more relevant to what happens to your estate once you pass away. Your domicile, particularly in the UK, can also have tax implications whilst you are still alive. Specifically, there can be advantages in the UK where you reside in the UK but are not deemed to be domiciled in the UK.
All of the above considerations will also, to a significant extent, depend on whether you are buying your French property for use as a secondary holiday home or as an investment, or moving to France to live or to retire.
