Stamped Duty Rebate

Post-Brexit £20,000 tax windfall if you own a second home in France

British taxpayers who own property in France have been given the greenlight to claim back thousands of pounds in overpaid duties, in a post-Brexit windfall for second home owners.

The French tax authority said it will reverse post-Brexit tax rises applied to foreigners who own property in the country. Some homeowners could receive £20,000 from French authorities, experts said.

But British citizens now face a battle with French bureaucracy to retrieve their money. François Mounielou, of Druces LLP, a legal firm, warned the tax authority was grappling with a Covid backlog and homeowners could have to wait two years for repayments to be made.

A British taxpayer with a holiday home that generated €10,000 (£8,349) in rental income last year will have overpaid €970 in tax which they can now reclaim. The rebates on capital gains will be even bigger. A British citizen who bought a second home in France for €250,000 in 2012 and sold it this year for €350,000 can now claim €8,900 in overpaid social charges on their profits.

Before Brexit, taxpayers living in the UK who owned property in France typically paid French social charges at 7.5pc – a reduced rate compared to French taxpayers rate of 17.2pc. This followed a 2015 EU ruling that people should not pay full French social charges if they were paying taxes to another EU social security jurisdiction.

Since Jan 1 2021, when the Brexit transition period ended, British taxpayers were no longer covered by the 2015 EU ruling. Their social charge tax bills in France duly jumped by nearly 10 percentage points to 17.2pc.

But last month, the French tax authorities published administrative guidance that the terms of the post-Brexit Trade and Cooperation Agreement essentially matched the EU terms, and therefore British taxpayers who own French property should pay only the reduced 7.5pc rate.

House price growth means taxes on French home sale profits ballooned last year. In the year to December 2021, French property values rose 7.1pc, according to the French National Statistics Office. For houses, the jump was 9pc. Residential rents increased by 1.6pc across the same period.

Jack Harris, of Knight Frank estate agents, said the tax cut could cause a spike in sales. “It may well encourage some British owners to sell in a buoyant market given the high level of international demand we’re seeing in prime destinations such as the Côte d’Azur, Provence, and French Alps,” he said.

The deadline to apply for a rebate is the second year after the one in which the tax was paid. The French tax authority did not respond to a request for comment.

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