ASK THE EX­PERTS

Whether you’re plan­ning your move to France, or are al­ready liv­ing there, our panel of pro­fes­sion­als aims to keep you fully in­formed with the best ad­vice for ev­ery even­tu­al­ity

Living France - - Contents - DO YOU HAVE A QUES­TION TO PUT TO OUR PANEL OF EX­PERTS? Email us at ed­i­to­rial@liv­ingfrance.com

Our ex­perts give their ad­vice on so­cial charges, ren­o­va­tion grants and mort­gages

BE­ING SO­CIAL

We have just re­ceived a de­mand for so­cial charges, some­thing which we have never re­ceived dur­ing the past 16 years be­ing res­i­dents in France. We are per­ma­nent res­i­dents and we have a R121 form and now an S1 which we un­der­stand has ex­empted us from these charges. The lo­cal tax author­i­ties have not been very help­ful telling us that new rules are ap­pli­ca­ble, and we have never re­ceived any no­ti­fi­ca­tion of this. Wil­liam and Carol Ross

France levies up to six types of so­cial charges on all forms of in­come and gains. These charges are dis­tinct from so­cial se­cu­rity and do not give rights to healthcare ben­e­fits.

The over­all ap­pli­ca­ble rates are:

15.5% on in­vest­ment in­come (in­clud­ing cap­i­tal gains). 8% of earned in­come (em­ploy­ment and self-em­ploy­ment). 7.4% on pen­sion in­come.

So­cial charges on earned in­come and pen­sion in­come are only payable if you are French res­i­dent and af­fil­i­ated to the French health sys­tem (i.e. you gen­er­ally need to be pay­ing French so­cial se­cu­rity con­tri­bu­tions or pro­tec­tion mal­adie uni­verselle con­tri­bu­tions). Form S1 does not ex­empt you from so­cial charges al­though in most cases if you have this form you should not be af­fil­i­ated to the French so­cial se­cu­rity sys­tem but in­stead to the coun­try who de­liv­ered the form. So it is pos­si­ble that you are now pay­ing so­cial charges be­cause, al­though ini­tially you were not af­fil­i­ated to the French so­cial se­cu­rity, you are now pay­ing French so­cial se­cu­rity con­tri­bu­tions (for in­stance you started a French busi­ness, such as a cham­bres d’hôtes).

So­cial charges on in­vest­ment in­come (div­i­dend in­come, bank in­ter­est, etc) are due if you are a res­i­dent of France. They are also due on French real es­tate in­vest­ment in­come (let­ting and cap­i­tal gains) if you are non-French res­i­dent. Not be­ing af­fil­i­ated to the French so­cial se­cu­rity will not ex­empt you from these charges. This means that you may not have paid so­cial charges be­cause un­til now you were only re­ceiv­ing pen­sion in­come, but you may now re­ceive in­vest­ment in­come (e.g. you just sold your UK prop­erty) which is nor­mally sub­ject to so­cial charges.

I can only make gen­eral com­ments about your ques­tion but other per­sonal cir­cum­stances such as em­ploy­ment abroad or tax res­i­dency may ex­plain why you were not sub­ject to so­cial charges and there­fore I would rec­om­mend that you speak with a spe­cial­ist. ROB KAY Sum­marised tax in­for­ma­tion is based upon our un­der­stand­ing of cur­rent laws and prac­tices which may change. In­di­vid­u­als should seek per­son­alised ad­vice.

OP­ER­A­TION RESTORA­TION

Ire­cently bought a prop­erty in France which re­quires com­plete ren­o­va­tion, and be­lieve there may be cer­tain grants avail­able for ren­o­va­tion work. What do these cover and would I be el­i­gi­ble for them? If so, how do I ap­ply? Si­mon Byrne

There are a num­ber of grants avail­able for ren­o­va­tion projects in France. Le crédit d’im­pôt pour la tran­si­tion én­ergé­tique (CITE) is a grant for ren­o­va­tion work that im­proves the en­ergy ef­fi­ciency of a prop­erty.

Avail­able to the owner-oc­cu­pier or ten­ants for their prin­ci­pal res­i­dence, it comes in the form of a tax credit or re­im­burse­ment. You can claim up to 30% of a max­i­mum of €8,000 for a sin­gle per­son or €16,000 for a cou­ple, plus €400 for each de­pen­dent. Avail­able through 2016, it looks likely to con­tinue into 2017.

An­other op­tion avail­able is the eco loan that has a 0% in­ter­est. Avail­able to all home­own­ers or ten­ants, this loan

must be used for work that im­proves the ther­mal ef­fi­ciency of the prop­erty or for the in­stal­la­tion of a sewage sys­tem. The loan is for up to €20,000 for two el­e­ments of en­ergy con­ser­va­tion and up to €30,000 for three or more, while a max­i­mum of €10,000 is avail­able for sewage sys­tems. The re­pay­ment pe­riod is nor­mally from three to 10 years but can be ex­tended to 15 years for ren­o­va­tions that in­clude three or more mea­sures.

To be el­i­gi­ble for this loan, you must ei­ther achieve a min­i­mum over­all level of en­ergy ef­fi­ciency for the dwelling, cal­cu­lated by a spe­cial­ist, or un­der­take the in­stal­la­tion of a sewage sys­tem.

If you do not sat­isfy these con­di­tions, you may still be el­i­gi­ble by un­der­tak­ing at least two of the fol­low­ing en­ergy con­ser­va­tion mea­sures:

In­su­la­tion of all the roof. In­su­la­tion of at least half of the sur­face of the ex­te­rior walls. Re­place­ment of at least half of the ex­te­rior win­dows and French doors. In­stal­la­tion or re­place­ment of heat­ing sys­tems or hot water tanks.

If you’re not em­bark­ing on an eco-friendly project, it’s also help­ful to note that the rate of VAT (TVA) for gen­eral ren­o­va­tions is 10%, down from the 20% stan­dard rate, how­ever there is a spe­cial rate of 5.5% for en­ergy-sav­ing mea­sures and ma­te­ri­als.

You can also get grants, sub­sidised loans and en­ergy sur­veys through the main en­ergy sup­pli­ers while the Habiter Mieux pro­gramme from the or­gan­i­sa­tion Anah (Agence na­tionale de l’habi­tat) of­fers a num­ber of grants for low-in­come groups.

Lo­cal and re­gional coun­cils also of­fer a range of dif­fer­ent in­cen­tives from lo­cal tax re­lief to grants and loans. Check with your lo­cal town hall or visit ren­o­va­tion-in­fos­er­vice.gouv.fr/trou­ver-un-con­seiller/step1 for more in­for­ma­tion. PETER WHITE

REN­O­VA­TION MORT­GAGES

Iam in the process of look­ing at prop­er­ties for sale in France with a view to buy­ing one in the near future, and in­tend to fi­nance it with a French mort­gage. I’m con­sid­er­ing a com­plete ren­o­va­tion project and would like to know whether ren­o­va­tion mort­gages are avail­able in France and, if so, how do they work? Also, am I likely to find it more dif­fi­cult to ob­tain a French mort­gage as a re­sult of Brexit? Kathleen Bren­nan

Firstly, the ques­tion on every­one’s mind at the mo­ment is whether Brexit has made it more dif­fi­cult to ob­tain a French mort­gage. So far, it hasn’t, as Bri­tain’s exit from the EU hasn’t as yet taken place and at this point in time no one knows what deal will be struck be­tween France and the UK. When it comes to mort­gage lend­ing from French banks to Bri­tish res­i­dents, it is still very much busi­ness as usual.

How­ever, an im­me­di­ate im­pact of the Brexit vote is the value of ster­ling against the euro, as ster­ling has lost ground and isn’t sta­ble. This has im­pacted how much peo­ple with GBP in­come are able to bor­row in France, as they are get­ting less euro for their pound. The con­se­quence this has on ob­tain­ing a French mort­gage is that when a bor­rower’s in­come is con­verted into eu­ros, it is less than what it was be­fore and this in turn means they have less bor­row­ing ca­pac­ity. Re­gard­ing a prop­erty with ren­o­va­tion works, it is pos­si­ble to fi­nance such a prop­erty with a mort­gage and there are four main op­tions.

The first op­tion is to use a French mort­gage to fi­nance just the prop­erty pur­chase and then fi­nance the ren­o­va­tion your­self. This gives you greater free­dom to carry out the ren­o­va­tion work your­self and to pur­chase your own ma­te­ri­als, etc, as and where you wish. How­ever, there are less banks will­ing to do this as the risk for them is greater.

You could also use a mort­gage to fi­nance the prop­erty pur­chase and the ren­o­va­tions. There is no strict rule of thumb as to how much you can bor­row mort­gage wise in terms of a per­cent­age of the prop­erty pur­chase price, how­ever the project must be log­i­cal and must re­main res­i­den­tial. The banks will re­quest that you sub­mit full quotes from trades­peo­ple for the works to be car­ried out and, where plan­ning per­mis­sion is needed for the ren­o­va­tions, the bank will also re­quire that you have an ar­chi­tect over­see the project and re­quest a copy of your con­tract with them also. The banks will base their will­ing­ness to lend on a val­u­a­tion that they carry out on the prop­erty and base their max­i­mum loan-to-value/mort­gage amount on this.

You could also buy the prop­erty with­out a mort­gage and then ar­range to have a mort­gage to carry out the ren­o­va­tion works. Quotes and de­tails of the ren­o­va­tions will be needed and the bank may or may not re­quire a val­u­a­tion de­pend­ing on the value of the mort­gage.

An­other op­tion would be to buy the prop­erty with a mort­gage with­out any ad­di­tional fund­ing for ren­o­va­tions and then take the nec­es­sary time to de­cide which ren­o­va­tions you would like and ob­tain pro­fes­sional quotes. Once you are ready, ap­ply to the same lender for a sec­ond mort­gage in or­der to fi­nance the ren­o­va­tion costs. Be­ware, how­ever, that some lenders have min­i­mum mort­gage amounts so it is im­por­tant to find out what these are be­fore ar­rang­ing the ini­tial mort­gage so that you do not fall foul of the min­i­mum amount when you want to ar­range your new ren­o­va­tion mort­gage. This is be­cause it is con­sid­ered a sep­a­rate mort­gage so the amount is not com­bined with the ini­tial price. SHARON HILL

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.