French to tax foreign second-home owners

UK citizens who own homes in France may have to pay substantially more in tax in that country, under proposals announced last week.

Capital gains tax, and income tax on rental income, will rise substantially for foreigners, to levels paid by French citizens.

Several hundred thousand UK citizens own, and let, homes in France.

At the moment, French capital gains tax is levied on the sale of a home at 19%, plus 15.5% as a "social charge" to pay for state benefits.

Likewise, tax on rental income is levied at 20% plus 15.5% social charge.

The social charges are not currently paid by foreigners who own homes in France, but under latest plans, they will be.

The extra taxes have been outlined in a supplementary budget which should become law by the end of July, and which will apply immediately.

It is possible the extra taxes to be paid by foreigners may be challenged legally.

Nevertheless, it is thought that the moves will inevitably make second homes and rental properties in France far less attractive to UK residents.