I am looking to buy a house in France. I am Australian. I want to take a mortgage from the local french bank account with lower interest rates. As I know there are a lot of taxes in France that does not exist in Australia, will you be able to tell me what tax I'm up against if I buy a house?1) if the house is my main residence, will i have to pay capital gains tax when I sell it in the future, is there a maximum period I have to live in it for? what kind of tax deductions will I be allowed, if any. 2) if the house is not my main residence, can i claim interest i pay on my mortgage against rent income i earn from my property. and if i sell it in the future how much tax will I be charged, capital gains or others. I know there's a wealth tax in France however if I'm not buying a property over 500,000 euros its not applicable right?Basically I want to know what taxes I should be expected to pay if I were to buy a house under the above situations and when I sell them and if this will affect my french partner at all.Thank you!!!
Bilingual Franch Avocat. Works in London and has opened a office in Toulouse (South of France).
If you purchase a property in France, you will have to pay the stamp duties (included and know as "notaire's fees") which represent about 6 to 7% of the purchase price. In addition, once you will have bought the property, you will have to pay some local taxes ("taxe foncière" and "taxe d'habitation"). However, please note that, if you are renting the property, you will not have to the "taxe d'habitation" as the tenant living there will have to pay it but you will still be liable to the "taxe foncière". The amount of these local taxes depend on the commune where you will buy the property.
If the property is your main residence, you will be exempted of paying the capital gain tax when you sell the property. There is no minimum or maximum period required by the law but usually a minimum period of 2 years is required by the tax administration in order to benefit of this exemption.
If the property is not your main residence, you will have to pay capital gain tax on the profit made when you are selling the property.
If you are renting the property, you will have to pay some taxes on the rent income. However, you will be allowed to deduct all the expenses related to the property (such as mortgage interests as well building works expenses) against the rent income.
The wealth tax is not applicable if the value of the propery is under 1,3 millions euros.
thank you for your answer! it's very much appreciate it!!
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