Does French holiday property become a 鈥榤ain home鈥� after selling up elsewhere?
Whether or not a French home is your 鈥榤ain鈥� one depends on factors including tax residency
Residency rules are not based on the status of a property but how much time you spend in it
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Reader Question: Our house in France is classed as a second home but we have now sold our main home in England and rent the place we now live. Are we now able to classify our French property as our 鈥榤ain home鈥� and avoid taxe d鈥檋abitation?
The classification of a property as a 鈥榤ain鈥� or 鈥榮econdary鈥� residence in France is not based on ownership but is more a matter of tax residency.
The French tax authorities will not classify a French property as a 鈥榤ain鈥� home if it is owned by someone who is a non-resident for income tax purposes.
So, that would only apply if, as a matter of fact, you treat the French property now as your main home, in that it is the centre of most of your activities and family life etc.
If there is any doubt over this, several other tests are used, including whether you spend more time in France than any other country.
If you spend the majority of your time in one location (roughly six plus months, or if you are spread across several destinations the place you spend the most amount of time), this is likely where your main tax residency is.
This will be the UK if you spend most of your time there, especially if you do not have a residency right to be in France year-round.
Any properties outside of your 鈥榤ain鈥� home where you spend the most time are classed as secondary, regardless of if they are owned directly or rented (and regardless of if you rent or own the property you use in the place of your main tax residency).
This applies both when a person owns/rents multiple properties inside France, or properties both inside and outside the country, as you do.
In the case of the former, there are, for example, some people who own a property in rural France (often because they have inherited it) but rent in a larger urban area because this is where they work.
The tax authorities say that as a general rule a person鈥檚 鈥榤ain鈥� home will be the one where they 鈥榟ave their main set-up鈥�, where they 鈥榣ive effectively and habitually鈥� and, usually, where 鈥榶ou have your strongest attachments鈥�.
In some cases this can be a grey area, but only one mainhome can be registered with the tax office and any others will be registered as secondary and the reasons for registering it as 鈥榤ain鈥� must be reasonable.
The tax offices look out for incongruous situations, such as a home which does not meet the 鈥榤ain鈥� definition being transparently registered as such for tax reasons.
Although you rent in the UK and have only one owned property 鈥� located in France 鈥� because you spend only a limited amount of time there per year it will be classed as your second home, and you are therefore, for example, liable to the taxe d鈥檋abitation.
It would also be assessable for capital gains tax were you to sell (but there are reductions based on how long you have owned the property).
If you moved full-time to France and it became your main fiscal residence 鈥� and the property you owned was where you spent most of your time 鈥� you would then be exempt from taxe d鈥檋abitation or capital gains tax as this would be your main home.
In general, exemptions for taxe d鈥檋abitation are not given in France.
One exception is for people who move into a care home or old people鈥檚 home 鈥� despite no longer living at their property, they are exempt from this 鈥榮econd-home鈥� tax on it.
Read more: Paper version of 鈥榩roperty use鈥� form available online in French and English
