Consequences of Brexit on French home-owners
As a second home owner in France, the following consequences of Brexit may be important to you:
Unless you can prove residency in France or if you have EU nationality, you can no longer travel as often as usual to your French home.
Since 1st January 2021, British citizens are limited to travelling across the whole Schengen zone without a visa for a maximum of 90 days in every 180-day period.
Therefore, if you wish to travel to your property on a regular basis, you should apply for the special Brexit Withdrawal Agreement Carte de Séjour (residence permit). This does not automatically make you a tax resident of France (unless you also fulfil one of the principal rules of tax residency) but will enable you to travel to France in the same way as you did prior to Brexit.
For details of how to apply for the residence permit:
If you earn an income from renting your French property (whatever type of rental activity), you have to pay income tax and social taxes on the profit in France.
In 2018, the French government reduced the social taxes from 17.2% to 7.5% for EU and EEA residents. Therefore, from 2021, British residents will have to pay 17.2% social taxes on net rental income.
On a positive point, however, the double tax treaty between the UK and France does not change and a tax credit is applied in the UK to avoid double taxation on French rental income.
Should you wish to sell your French property whilst you are UK resident, the same social taxes will be applied in addition to Capital Gains Tax (again, these had been reduced to 7.5% for EU/EEA residents). French CGT is calculated on a sliding scale according to the number of years of ownership with a reduction applied after the 5th year of ownership.
The rate of CGT starts at 36.2% (19% + 17.2% social taxes) and this reduces gradually over a period of 22 years for income tax and 30 years for social taxes. Should your capital gain exceed €50,000, an additional tax is also applied.
A second consequence for British citizens reselling their French property is that they will also be required to use a fiscal representative for all sales in excess of €150,000. This is an obligatory service of verification, for which the fiscal representative takes a fee in relation to the amount of CGT payable.