Recent tax changes announced by President Francois Hollande may not be as serious for French holiday home owners as first thought, according to UK regulated specialist mortgage broker Offshoreonline.org.
The company believes that the changes, which will see the tax on rental incomes rise from 20 to 35.5 per cent, and capital gain taxation rise from 19 to 34.5 per cent, will not have such a widespread effect as had been feared. This is because, for many, increased charges levied in France will be equalled out by a decrease in the UK tax payable.
A UK based 40 per cent tax payer, for example, will see the proportion of the tax due to the UK authorities drop from 20 per cent to 4.5 per cent, as the French authorities take a large share of the sums due.
As well as this, the taxes will only apply to those renting out their property or using their holiday home for commercial gain (for example as a B&B business)
Managing Director of Offshoreonline.org Tim Harvey believes that the majority of their clients are just looking for a holiday home without wanting to rent it out:
“The clients who we arrange mortgages for are generally looking for a holiday home for themselves and close family and friends. These may be ski chalets or they may be located in one of the popular tourist areas such as the Cote D'Azur or Dordogne. For these owners, a commercial rental plan is simply not on their agenda.”
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