This product is not a 2 year flip, but recommended 5 to 10 years as the Capital gains tax tapers the longer you hold. It is advisable to buy and hold, an ideal pension fund product.

With reference to Romania and the yields being 6%, this could be true, we have partners who say the same. But then we do the reality check, with Romanian friends, the yields to sales prices are out of kilter, with NO GUARANTEES on rents.
These are WITH RENTAL GUARANTEES AT 6%. Romania is not! There are very few places around the world with this level of protection and security. To date we have not found any where else. France is a very exceptional market.

One other contrast between France and Romania. FRANCE IS A REGULATED AND LICENCED REAL ESTATE MARKET WHERE YOU NEED TO BE QUALIFIED TO SELL PROPERTY. Romania is a free for all, slightly backward real estate market, with contentious title issues, land registry, alot of cowboy operators. So for the more risk seeking, higher risk, possibly higher return, though no guaranteed, then voila, enter Romania, where we will help you.

For solid returns, leveraged funds, GUARANTEED RENTAL INCOME, SAFETY, a longer term investment, ideally 10 years plus (so all your profit is not eaten up by real estate commissions, legal fees, some small taxes), then FRANCE IS VERY GOOD.

And when you compare Romania to France, MY PENSION FUND MONEY will be on the country MOST VISITED IN THE WORLD, with a completely CLEAN AND TRANSPARENT REAL ESTATE MARKET, with the most TOURISTS per year, with an under supply in certain areas, with very hard planning laws to restrict supply and keep prices rising.

SOME DOCUMENTS BELOW TAKEN FROM THE INTERNET, PLEASE USE A PROFESSIONAL TAX ADVISER WHEN ASSESSING YOUR TAXES OR REGULATED FRENCH PROFESSIONAL.

Romania is here to stay, but as mentioned my pension fund seeks steady and consistent returns over the long term, rather than casino style investing in certain emerging markets. I know Romania through very close contacts, and would prefer the stability and safety and western standards of the worlds most visited tourist destination for my pension fund money.



France
Capital gains tax is a flat 16%, with an annual exclusion or allowance of €5600. Residents pay an additional 11.6% 'Social Charges', non-residents are not liable to this, there is a 15 year taper relief. However, in some specific situation tax can be reduced or eliminated (such as selling one's principal private residence).



From French Entree

If you are subject to capital gains tax on a property sale, how is the tax calculated ?

The basic rules are that the purchase price can be revalued, by purchase and sale costs and any major renovation bills, although there is now no inflation allowance. The resulting figure is subtracted from the sale price to calculate the taxable gain.

The gain is then taxable at a set rate of 16%, for European residents, with an a extra “social tax” ( a form of National Insurance contribution) of 10% ( rising to 11% this year) for French residents. Anyone who is not a resident of a European state will pay a set tax rate of 33%.

However, the conditions of acceptance of “renovation work” are very stringent. This must be carried out by a registered French artisan ( with appropriate invoice) and invoices for materials you have purchased yourselves are not allowed.

Unfortunately, the previous possibility that you could have an “expert evaluation” of the work done, instead of producing invoices, no longer exists, so capital gains, for the “bricoleurs”, who have done all the work themselves, is now much more of a problem.

Moreover, if you are non-resident of France, you are obliged to appoint an official “tax representative”, who is responsible for calculating and paying the tax on your behalf. Our experience of certain of these organisations is that they are expensive, uncommunicative and act more like tax inspectors, than your own “representative”.

Even so, all is not lost, since there has always been a significant allowance given for the length of time you have owned a property, which has seen major changes this year :
There is no allowance for the first 5 years of ownership, but every year, from then on, allows you 10% off your capital gain, with the result that a property owned for more than 15 years is free of Capital Gains Tax.

Whatever your situation, these rules show that the tax position of a British resident in France is always going to take some understanding. Taking professional advice has become even more important.

Rupert Holderness

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