It will largely depend on what you want your property is for – as a holiday home for infrequent visits, or a more permanent base in France for a semi-retirement, and each case must be dealt with differently.

There are many British purchasers who are charmed by the incredible selection of traditional ‘longeres’ or long houses with their carved granite stonework and mortar pointing. And it is true that they can make incredible homes when lovingly restored, but you must bear in mind that they are built in an old-fashioned way and they will probably need more up-front investment than more modern houses and also need to be restored with thought for the original building methods, which can be very expensive, so before buying, do get a full building survey done.

Large country houses are much easier to come by in France than in the UK, but if you are not going to live there, who will be looking after your house in paradise when you are absent? A locked-up house can quickly become dusty, dank and unwelcoming for holidaymakers in need of relaxation. So think about the general practicalities before jumping in feet first and consult your property survey to ensure the house has good ventilation!

Plenty of land is the norm in France, it is after all three times the size of the UK, but again, be aware of the amount of up-keep required with a large garden and just ensure that the first few days of your visit are not spent in waist-high grass looking for the gate!!

It is the norm for young French to rent their main home for many years before coming into the property market if they do at all. So it could be a wise investment to buy a property that will provide a rental income to you from local French families, though of course if you do this it cannot serve as a holiday property. Many parts of France have a serious lack of suitable properties to rent and so rental incomes are strong. If you just want an investment abroad, this is one way to ensure that you get a reasonable return on it, as well as a possible capital gain at the end.

The most important thing to bear in mind is what can you afford within your wish list and still have some money left over to make the property your own and provide for any unforeseen snags, although these should be minimal if you have a full building survey report. Always allow for an annual renovation allowance on your property and don’t forget, the larger the house and garden, the larger the annual taxes!

Article courtesy of www.direct-valuations.com

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In certain circumstances, landlords may now be able to offset any losses they have made on their property within the past five years against their personal tax bill and may also be able to claim back capital gains tax paid on the sale of a property in Europe.

The changes are designed to give those with properties in other European countries the same rights as those with holiday homes in the UK. However the advantages will be short lived as the tax breaks will be abolished completely for both sets of owners from April 2010.

The rules apply to “furnished holiday let” (FHL) properties. Whilst there are strict rules as to what may qualify as an FHL, where properties are commercially let on a short-term basis for at least part of the year, they will normally qualify.

Mark Tuckwell, tax director with Target Chartered Accountants, says the changes will affect those who have suffered “losses” on the letting of the property since 6 April 2003 or those who have sold the property at a profit during the same period.

He explains: “Around a million UK residents own holiday homes overseas, mostly in Europe, and many of them let out their property for large periods. Although they may not have considered it this way in the past, technically they are likely to be making a loss for tax purposes and one that they can offset against their UK tax bill.”

“This will be a surprise windfall for overseas holiday home owners, and one that could save them a significant sum in tax. So for example, a higher rate taxpayer who has been making a loss of £5,000 a year for the past five years would be entitled to reclaim £10,000, while someone who sold their property and paid £30,000 capital gains tax may now be able to claim back as much as £28,000. “

Anyone who thinks they could qualify for a rebate should take advice from a tax professional. “This is vital, as with the current state of the Nation’s finances, HMRC are unlikely to be immediately forthcoming with tax rebates. I would also urge some urgency, as in the face of mounting liabilities, it is quite possible that HMRC could bring forward the cut-off point for such claims”

The changes in the Budget follow a decision by the European Court of Justice which meant that the UK could be in breach of European law by giving tax breaks to those with holiday homes in the UK but not in Europe. Extending the tax breaks will cost the taxpayer an estimated £15m a year so the government has decided to remove it entirely from the start of the 2010 tax year.

HOW THE REBATES WORK OUT IN PRACTICE

Example 1 – a current owner

Mr Smith owns a Spanish villa which, apart from a couple of weeks private usage, is let commercially throughout the year. The seasonal nature of the business means that year on year, a loss of around £5,000 is suffered. Mr Smith may now be able to make a claim to use this loss to set against UK income tax over the last five years. As a higher rate taxpayer, this would generate a tax repayment of around £10,000 (5 years x £5,000 x 40%).

Example 2 – a former owner

Mrs Jones acquired a holiday property Portugal in 2001 for the equivalent of £100,000. The property was let out for five years and sold in 2006 for £200,000. She paid capital gains tax in the UK of £30,000 on the sale after all available tax reliefs. It may now be possible to and amend the calculation to include further reliefs which would reduce the taxable gain to around £2,000. This would save Mrs Jones £28,000.

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