Ok we stay where we are
Having had the excitement of advertising our property for sale on the internet, having quite a few enquiries very quickly, and agreeing a sale price with a potential purchaser, it turned out we can’t sell (at least at that price) because of complications with tax and notaires.
No big deal I suppose, but slightly annoying. Especially for the ‘purchasers to be’. But a couple of curious things have emerged from the experience.
Not least among these is the idea that different notaires can have different views on the tax position of a sale, and this view can have a very significant impact. In our case, one notaire believes a tax bill of euros 80,000 would be payable, while others think that a bill of perhaps 10-20,000 euros of charges would arise.
This is because according to one view we are selling a ’second home and a new build home’ (new-build home being our 200 year old barn!) and according to another view we bought a farm and buildings and we are selling the same farm and buildings, having lived there for a few years. The second is what I had assumed would be the case!
Now for some reading this perhaps 70,000 euros would be neither here nor there. Sadly for us it is pretty important. For me 70,000 euros looks like a new car and good holidays for the next 15 years, or enough wine to keep me going for the rest of my life. Not an amount to be thrown away lightly on a possibly unnecessary tax bill.
We are still considering our next move. Or our next non-move as the case may be. I’ve spent many happy hours browsing the notaires information website and several others, but none seem to quite cover our circumstances. Hence, I suppose, the confusion.
And now that spring is springing, trees are blooming, and the deer are eating all the trees who can have time to feel miserable?
It strikes me that a) this colour scheme needs work and b) the thing to do is to buy sufficient farmland to get yourself classed as an “agriculteur”.
The amount of land is usually not significant nor expensive. I gather that your existing holding is already considered a farm building therefore the land which you already have is farmland. Same applies to us and we were told that about 2Ha was enough (total cost about EUR 7000 then).
This should take you definitively out of the “new build” debate.
I wouldn’t bother with a notaire’s word. It’s going to be an accountancy issue rather than a legal one.
Finally, you should be able to get a view on the matter from the tax office who are the final arbiter in such things anyway.
Oh, and we are told that, if we sell through what appears to be the front runner of our estate agents, we won’t pay any tax at all!
Thing to do apparently is to sell the buildings only rather than business + buildings. Net effect is that you are then selling your own house which is, of course, a taxfree thing to do.
Thanks Arnold,
I never came across that agricultural rule before, and the barn already has about 13 acres, part of which is hay-baled by a farmer.
We’re getting a lot of conflicting advice about this, but the problem is in your last statement “you are then selling your own house which is, of course, a taxfree thing to do.” The position seems to be that the house isn’t our own house, because we haven’t lived in it for 2 years, and the barn isn’t taxfree to sell because it is ‘newbuild’.
Hence apparently the curious position that neither counts as a taxfree sale. Still researching.
And yes it is a bit OTT the orange, I’m still researching that as well.
Hard to say without seeing your place but I think that you’d still get away with selling it as “your house”.
Take a normal UK style house as an example. Suppose you have your semi plus garage. Then you need to get the semi done up and therefore live in the garage for a while but decide to do up the garage first so that it is useable as accommodation. You then move into the “garage” and start work on the main house. All this time you are still living in “your house” if you think about it because the garage is part of the house (or rather part of the property as it being physically attached to the house is neither here nor there).
I like the new template… very clean. Must see about updating my own.
The garage in this example remains part of the house so when sold the whole lot is still taxfree as you’re only selling your house, albeit with a garage that has been done up somewhat.
Unfortunately, if I have:
- lived in the barn for 2 years, while declaring on the tax return that I have been renting out the house; and
- have full planning permission to convert the barn into a residence, and I am now paying taxe d’habitation on it; and
-I’ve been having all and sundry visiting in the barn for 2 years, so that every single person in the commune has probably seen it
none of this applies.
We get a second opinion from a second notaire and they are in complete agreement - a new build or major restoration, with planning permission, is definitelt always subject to 19.6% VAT if sold within 5 years.
As a slight relief, if we sell the whole place at the same time, we can decide (within certain constraints) how much of the sale price is for the house and how much is for the barn. At the moment, though, that is simply moving tax from a VAT property to a capital gains tax property.
We are going to move back into the house when the letting season is over. He advises us to also then let out the barn next year, to make it clear that it is no longer our private principal residence. Then a year later the house at least leaves the CGT trap.