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Old 01.12.2011, 02:39
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2nd home in France - swiss tax implications

What are the tax implications of owning a 2nd home in France as a Swiss, C permit resident?

French income tax on any lettings? Swiss income tax also?
What rate of capital gains tax?
Tax fonciere and tax d'habitation?
Anything else?

Thanks in advance.
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Old 01.12.2011, 08:25
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Re: 2nd home in France - swiss tax implications

I am also curious about the answer.

However, as with taxes go, you may need to factor in the "days spent per year in 2nd residence" variable into the equation in order for your question to be answerable.
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Old 01.12.2011, 09:16
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Re: 2nd home in France - swiss tax implications

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What are the tax implications of owning a 2nd home in France as a Swiss, C permit resident?

French income tax on any lettings? Swiss income tax also?
What rate of capital gains tax?
Tax fonciere and tax d'habitation?
Anything else?
We don't let out, but yes, I think you'd need to declare any such earnings. 90% sure that it would be done as part of your Swiss tax return, no need to involve the French at all. Certainly the value of our house is included in our Swiss tax calculations, although to what extent I'm not sure, and I don't think it can be offset by the mortgage interest, but to be honest I don't know - that's what the accountant is there for.

Local taxes such as you mention are payable locally, to the commune, and don't involve any central bureaucracy. Will vary by house size and location, of course, but likely to be in the order of one to two thousand in total. Tax d'Habitation is payable by whoever's living there, of course, whereas the taxes foncières are due from the house owner.
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I am also curious about the answer.

However, as with taxes go, you may need to factor in the "days spent per year in 2nd residence" variable into the equation in order for your question to be answerable.
Since the bi-lateral agreement came into force a few years back it's very simple. (As I understand it) you simply need to spend 60 or more working day nights in Switzerland for it to be classed as your country of residence.

In practice there is no-one who will even ask the question. The tax authorities never did, but the Douanes used to try to crack down on illegal imports of cars and other easy targets like that, in which case it was your own responsibility to prove that the French house was a second residence, with no hard and fast rules to show it. Difficult, it was, but as I say these days there's no problem.
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Old 01.12.2011, 10:32
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Re: 2nd home in France - swiss tax implications

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I am also curious about the answer.

However, as with taxes go, you may need to factor in the "days spent per year in 2nd residence" variable into the equation in order for your question to be answerable.
Not many - 20?
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Old 01.12.2011, 10:37
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Re: 2nd home in France - swiss tax implications

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Since the bi-lateral agreement came into force a few years back it's very simple. (As I understand it) you simply need to spend 60 or more working day nights in Switzerland for it to be classed as your country of residence.

In practice there is no-one who will even ask the question. The tax authorities never did, but the Douanes used to try to crack down on illegal imports of cars and other easy targets like that, in which case it was your own responsibility to prove that the French house was a second residence, with no hard and fast rules to show it. Difficult, it was, but as I say these days there's no problem.

Switzerland is my primary residence, which is confirmed by the number of days here (well over 60) and also the residence permit. However, I'm curious to know if I'll have to pay tax on rental income in France and at what rate -is worldwide income taken into account regarding the rate, or is it just the rental income in France, which won't even reach minimum taxable levels. The French government proposed new rules in May, but I don't know if they made it through.

Thanks
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Old 08.12.2011, 12:47
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Re: 2nd home in France - swiss tax implications

As a general rule: Real estate property is always taxed where it is located.
This is also true for Real estate in France (based on the existing double taxation treaty between Switzerland and France).

So there is no Swiss tax on the house in France.

But...

Swiss income tax:
You still have to declare the French house in your Swiss tax return.
The income that you have with the house (rent or theoretical rent income) is taken into account for the determination of the Swiss tax rate (i.e. there is no Swiss tax levied on this 'income' but - due to the progressive tax rates - it increases the tax that you pay on your other taxable income.

Swiss wealth tax:
Same with wealth tax. No Swiss wealth tax on the French house. But higher tax rate on your 'normal' taxable wealth.

Mortgage interests:
These can partly (i.e. in relation to your taxable wealth taxable in Switzerland and in France) be deducted from the Swiss taxable income.

Example (simplyfied ):
The tax value of your house in France is CHF 300'000
The tax value of your other assets is CHF 200'000
You do have a mortgage of CHF 200'000 on the house in France and pay a yearly mortgage interest of 10'000.

3/5 of your wealth is taxed in France
2/5 of your wealth is taxed in Switzerland
--> 2/5 of your mortgage interest is tax deductible in Switzerland

Hope this is not tooooo complicated. Cheers.
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Old 08.12.2011, 13:13
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Re: 2nd home in France - swiss tax implications

Just be careful when and if you come to sell it, if you are going to invest in the property make sure if you can, that you invest in structural improvements like extensions etc, get them done professionally and make sure you keep those original invoices and proof of payment i.e a copy of the bank statement as these will prove valuable when it comes down to calculating your CGT.

If your builder suggested improvements that will be CGT beneficial question them and research them, many french builders take advantage of the complicated french CGT system and pull the wool over the eyes of their clients especially the Brits.

When you come to sell your notaire is obliged to find a company (or you can) that will calculate your CGT, these are private companies who work on commission, it is in their interest to screw every last cent out of you, keep records of all works and question everything.

CGT will be taken from sales proceeds and once completed it is very difficult to get any monies back if you or your CGT agent made mistakes.

On the whole French property is seeing some gains although choose your location wisely..
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Old 02.01.2012, 11:34
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Re: 2nd home in France - swiss tax implications

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As a general rule: Real estate property is always taxed where it is located.
This is also true for Real estate in France (based on the existing double taxation treaty between Switzerland and France).

So there is no Swiss tax on the house in France.

But...

Swiss income tax:
You still have to declare the French house in your Swiss tax return.
The income that you have with the house (rent or theoretical rent income) is taken into account for the determination of the Swiss tax rate (i.e. there is no Swiss tax levied on this 'income' but - due to the progressive tax rates - it increases the tax that you pay on your other taxable income.

Swiss wealth tax:
Same with wealth tax. No Swiss wealth tax on the French house. But higher tax rate on your 'normal' taxable wealth.

Mortgage interests:
These can partly (i.e. in relation to your taxable wealth taxable in Switzerland and in France) be deducted from the Swiss taxable income.

Example (simplyfied ):
The tax value of your house in France is CHF 300'000
The tax value of your other assets is CHF 200'000
You do have a mortgage of CHF 200'000 on the house in France and pay a yearly mortgage interest of 10'000.

3/5 of your wealth is taxed in France
2/5 of your wealth is taxed in Switzerland
--> 2/5 of your mortgage interest is tax deductible in Switzerland

Hope this is not tooooo complicated. Cheers.
Good answer. The only small extra twist is that your Swiss taxation rate will be based on your global income, and this is applied to your swiss taxable income to calculate the amount payable.
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