Tax

French Leasebacks and Irish Tax

For those who are tax resident in Ireland, the income from French leaseback rental is likely subject to Irish tax.

Income Tax

There is a double tax agreement between Ireland and France. This means that the amount you pay in tax in France does not have to be paid again in Ireland. However, the rules for calculation of tax are different in different countries. Therefore you might have a bill of €1,000 in France and pay it, and a bill of €1,500 in Ireland. Then you would have to pay the €500 in Ireland.

See the Irish revenue site for details:

Foreign Income Tax and Irish liability 

and 

Foreign Rental Income

This can be filed yourself under self-assessment and the revenue site is helpful in this regard.

My understanding is that Taxe Fonciere is an allowable expense (this is equivalent to rates or council tax and usually includes the rubbish). The allowable expenses on a foreign property are much the same as the allowable expenses on a rental property in Ireland.

Depreciation is allowable on ‘wear and tear’ (eg. furniture and fittings) at rate of 12.5% over 8 years. 

Nothing is allowable if you are using the property yourself, for those periods that you are using it.

This is a guide only and does NOT constitute tax advice.

The sales and marketing of these properties often refers to the ‘favourable’ tax allowances for leaseback properties in France. However, they often fail to mention that such allowances don’t matter a jot as you are subject to income tax in Ireland.

The sales and marketing is often very misleading in this regard.

Capital Gains Tax

I applaud you if you need to know about this!

Those who bought leaseback properties in fire-sales  after they were re-possessed by French banks probably need to know about this. As for others, many have only seen the value of their property fall.

If the value of your property increases, when you go to sell you will need to know about Capital Gains Tax. Talk to an accountant about this.

One company selling these properties is Sextant Properties. I love the way they say the value WILL increase.

You should not forget that the value of your property will also increase..

If only that were true..

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