Veem
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Post by Veem on Dec 13, 2022 15:22:35 GMT 1
We own a house in the UK which has been rented out for 25 years. Generally we have had reasonable tenants, but the tolls of time and our enforced reliance on agents to 'manage' the house are finally telling. The house is now beginning to look very tired and is in need of some serious investment.
It has yielded a fair income over the years but we wonder now if we want the responsibility of organising fairly major renovation work from a distance. So, we are also considering another possibility; that of selling the house, accepting that the asking price would of necessity reflect its need for home improvements.
Does anyone have experience of a similar situation and can offer feedback on aspects such as CGS (payable in both UK and France?) or other relevant points we have not as yet considered?
As a tenancy is about to come to an end, we have only today seen current photos sent by the agent which have put this train of thought into motion.
Thanks in advance for advice.
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Post by lindalovely on Dec 13, 2022 16:07:15 GMT 1
I sold mine for exactly the same reasons as you. The capital gains was a little complicated if I recall. You first work out liability for capital gains in the UK and there seem to be a couple of formulas you can use ..best to get proper advice. You pay that if you owe anything, and then you declare in France, where you will be given a credit for anything you have paid in the UK. The fact that my property needed work did not seem to put off potential buyers. It did however mean they couldn't get a mortgage so I ended up having to organise the work to be done anyway. (It was a damp problem). It took several months to organise but eventually it was done and I haven't regretted it.
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Post by amandaj on Dec 13, 2022 16:19:36 GMT 1
Just had a quick look to confirm and apparently no capital gains tax in France after 22 years and no social charges (if applicable) after 30 years, so there may be no tax liability in France whatever the gain. Some points re UK CGT: helpful if you have lived in the property at any time; there is a new-ish system where Capital Gains on UK property must be declared online and paid within 60 days of completion, don't forget expenses eg buying and selling costs, improvements etc www.gov.uk/guidance/capital-gains-tax-for-non-residents-uk-residential-property |
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Veem
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Post by Veem on Dec 13, 2022 17:04:49 GMT 1
That's already most helpful ladies. In fact I bought the property in 1991 (so have owned it 31 years) then lived in it until 1997, since when I have rented it out.
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Post by tim17 on Dec 13, 2022 18:21:43 GMT 1
We sold a UK rental property last year. To calculate the UK CGT liability you take the sale price from the notional value in 2015 to give you the profit and from that you deduct all the purchase and sales costs (estate agents and legal fees) to work out the final figure liable to CGT. The good news is that every taxpayer also as an annual CGT allowance of £12300 so if it was jointly owned that's £24600 of allowances before you pay anything. Given that the property has been owned since 1991 you don't need to worry about French CGT.
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Veem
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Post by Veem on Dec 14, 2022 8:55:14 GMT 1
Thank you Tim. Most helpful information.
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Deleted
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Post by Deleted on Dec 14, 2022 15:30:23 GMT 1
Going by the prices of building materials and builders and the fact your not close by I would sell you will probably get a very good price.
One of the posts above says no CGT so its a win win.
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Post by pcpa on Dec 14, 2022 21:05:32 GMT 1
I took the same opportunity to sell after the last tenants had left their mark, I completely refurbed the whole house but the one next door that had not been decorated, maintained or improved since the 70's sold for pretty much the same price so I think you may be surprised, don't discount the price, allow the potential purchasers to do that, if the agent convinces you to mark it down it probably means they have a pal lined up to buy it and you will never get the bidding war of offers that I did. Even in perfect decorative order as mine was people are going to rip it all out and start again to make their mark as indeed the new owners of my house have done, my experience was that a property needing everything doing was not really discounted and one in perfect decorative order ready to move in was not worth any more, even the new build on the land that I sold seemed too cheap by comparison, all 3 adjacent house sold within 4 months of each other in spring/summer this year. Things may have cooled off but mine sold a couple of times (there are some timewasters about) each time the agents only allowed viewings on one "open day" and the visits were every 15 minutes, each time I had several offers by the end of the day significantly in excess of the asking price. In hindsight there wasn't a better time (for me) to sell and I think that it is still perhaps the case but I don't think it will be for much longer. The other bonus was the rise in interest rates from 0.01% I had been recieving to 3% on a 3 year bond which means the interest on the proceeds is bringing in significantly more than the gross rent without any costs or any risk, well not unless I have another Icelandic Bank experience  |
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Post by tim17 on Dec 14, 2022 21:19:52 GMT 1
The UK housing market is changing rapidly but I still believe selling should be relatively easy provided the property is priced correctly.
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Veem
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Post by Veem on Dec 15, 2022 12:34:30 GMT 1
Does anyone have any experience with a new style of property auction method - online. I have just received a call from my letting agent to tell me about a company called Iamsold that auctions property this way.
They claim (guarantee?) a 56 completion date from the auction date and the buyer pays the fees.
I just wonder why the agents would pass on the chance to make fees from me themselves ...........
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Post by tim17 on Dec 15, 2022 13:01:12 GMT 1
Unless you're desperate to sell quickly or the house is in a poor condition I'd steer clear of auctions.
Would you be willing to give me more details on your property Veem?
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Post by Deleted on Dec 15, 2022 13:52:40 GMT 1
Unless you're desperate to sell quickly or the house is in a poor condition I'd steer clear of auctions. Would you be willing to give me more details on your property Veem? Sometimes auctions can work but as T17 says stick with a good agent. You have what most people want which is a property that needs some work and will be cheaper than most other properties around it. |
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Veem
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Post by Veem on Dec 15, 2022 16:22:38 GMT 1
To be honest, I am shocked at how much work the house would need doing to make it attractive as a buy. But as a doer-upper, that's a different story.
It started off with a warm air ducted CH system with grills in the internal walls and the warm air passing through ducting enclosed in a tongue and groove ceiling height tunnel. The system was replaced by gas fuelled combi boiler radiators. The original combi bioler cupboard is now completey unused and needs incorporating into the kitchen space. The component parts for the ducting are still in place, though clearly obsolete and that all needs removing. Also, very recently it seems rodents have discovered that the ducting gives them motorway access throughout the house via access through the garage. At least one of the double glazed windows I had installed is now faulty. The kitchen and bathroom, fitted new in 1992 are both looking very weary and dated. There are signs of damp (not much, but it's there) on some walls.
I've discussed iamsold with my trusted letting manager (she's a horsey girl so I must be able to trust her). She absolutely assures me that this could be a very good way of selling.
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Veem
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Post by Veem on Jul 26, 2023 12:40:04 GMT 1
An update. The market changed very quickly and the house ultimately sold for less than the valuation and took 6 months to complete. In the end, I just wanted rid!
So, I've done the CGT calculation and reported back to HMRC. The payment date is 28th August and all funds are ready to transfer. The HMRC Calculation tool for CGT automatically applied 3 methods to the information I had declared and the most beneficial to me was calculated to be £55,000 less than the highest! My next UK return will be for 2023-4 and there will be no rent declaration to make, though I think I may have to refer to the CGT details. I shall still have to complete SA 100 and SA 109 Residence, Remittance basis etc but not SA 105 UK Property. Can I complete these two forms online? I think it was 105 that was incompatible with HMRC's software. Can anyone confirm that?
As for declaring the gain to the French tax department, specifically, does the advice given in the above posts by amandaj and tim17 still apply? If so, can anyone give links to confirm? Amandaj? Tim17? Do I have to make any mention of the gain to the French authorities?
Thanks for ploughing through this.
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Post by amandaj on Jul 27, 2023 14:36:37 GMT 1
Hi Veem,
I have replied to your message.
Sorry, don't know about whether you have to declare to France (my compplete guess would be that you do)
Don't know about SA100 and SA109 online as I use software, however, I am reasonably sure you have to declare again on the capital gains pages of your 2023-24 return even though you have (I assume) used the online capital gains declaration. That is certainly the case for UK residents so I can't imagine it wouldn't be the same for non residents.
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