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First Time Buyer with Foreign Investment
trilson
Posts: 4 Newbie
I've found myself in a bit of a pickle...
A couple of years ago, my Father and I invested in a French leaseback property together (via bank auction) at a residence in the alps. The apartment is fully managed and leased to CGH (the management company) on a fixed-term contract (with x weeks usage a year for us), however the apartment itself is owned freehold.
I currently rent and work in London, and have recently started looking at moving out into the suburbs. My girlfriend and I have had an offer accepted on a property, however our solicitor is informing us that we will be liable for an additional 3% stamp duty on our purchase due to the apartment in France. This property will be our main residence, however because we don't have an existing property in the UK to sell, HMRC won't recognise it as such (and therefore we're still liable for the 3%).
This seems completely barmy to me -- am I missing anything?
A thought which crossed my mind was if the apartment in France could be classified as a Commercial interest? The leaseback scheme is dependent on the residence being labelled a 'residence de tourisme' in the local area, and as such provides hotel-like services to the short-term guests that stay there (reception, cleaning, etc.).
Any words of wisdom or advice would be greatly appreciated! Thank you.
A couple of years ago, my Father and I invested in a French leaseback property together (via bank auction) at a residence in the alps. The apartment is fully managed and leased to CGH (the management company) on a fixed-term contract (with x weeks usage a year for us), however the apartment itself is owned freehold.
I currently rent and work in London, and have recently started looking at moving out into the suburbs. My girlfriend and I have had an offer accepted on a property, however our solicitor is informing us that we will be liable for an additional 3% stamp duty on our purchase due to the apartment in France. This property will be our main residence, however because we don't have an existing property in the UK to sell, HMRC won't recognise it as such (and therefore we're still liable for the 3%).
This seems completely barmy to me -- am I missing anything?
A thought which crossed my mind was if the apartment in France could be classified as a Commercial interest? The leaseback scheme is dependent on the residence being labelled a 'residence de tourisme' in the local area, and as such provides hotel-like services to the short-term guests that stay there (reception, cleaning, etc.).
Any words of wisdom or advice would be greatly appreciated! Thank you.
0
Comments
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You're only missing that even if you did sell your French property, it wouldn't come under the 'selling a main residence' rule anyway, as it's not your main residence
My world of wisdom would be either
Sell your 1st property
Or
Get saving for your stamp duty0 -
A thought which crossed my mind was if the apartment in France could be classified as a Commercial interest? The leaseback scheme is dependent on the residence being labelled a 'residence de tourisme' in the local area, and as such provides hotel-like services to the short-term guests that stay there (reception, cleaning, etc.).
Doesn't matter if you consider it commercial or not, an apartment's an apartment.
Is your share in it worth more than £40k?0 -
The share is worth more than £40k, although I'm not sure how this is defined. Nowhere in our documents does it say my father and I own a 50% stake in the property, however I'm guessing this is implied.0
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You will have to pay the extra 3% stamp duty because you own another property. It doesn't matter where the second property is.0
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Presumably you're making a profit on your investment. How does that differ from investing in UK property and profiting from that?
Get saving for your stamp duty or rent.0 -
My confusion is with how the system works. If I was already a UK homeowner, I could buy an additional property in France and not pay any penalty. However if it's the other way around (i.e. I have an investment in France but rent in the UK), then I'm stung. This doesn't make sense to me...0
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My confusion is with how the system works. If I was already a UK homeowner, I could buy an additional property in France and not pay any penalty. However if it's the other way around (i.e. I have an investment in France but rent in the UK), then I'm stung. This doesn't make sense to me...
I don't think you're cut out for this.
Why do French rules have any say in the UK rules?
You have one property. You now want two.
It's really very very very very simple.0 -
Does HMRC know about your foreign property?0
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I'm not sure what's hard about it.My confusion is with how the system works. If I was already a UK homeowner, I could buy an additional property in France and not pay any penalty. However if it's the other way around (i.e. I have an investment in France but rent in the UK), then I'm stung. This doesn't make sense to me...
If you buy a property in France, the French government's tax rules apply. I have no idea whether the French government have such a rule or not.
If you buy a property in the UK, the UK government's tax rules apply. The UK government says that 3% extra SDLT is payable if you already own another property, UNLESS you are replacing your current main residence.0 -
HMRC quite clear, whether unfair or not is irrelevant, pay it like everyone else does.
https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property
If your getting income from your French property, you need to declare it
https://www.gov.uk/tax-foreign-income/overview"It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
G_M/ Bowlhead99 RIP0
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