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07/04/2006, 12:41 phylisbide Joined on 10/01/2006 Posts 75 Ruling on 'allowable costs' when selling Sorry to start yet another thread on this rather protracted saga, but... our friends who decided they want out of the shared property, took all the joint bills for materials and French artisans to the notaire to have ownership changed and all the plus value stuff sorted. The notaire said the materials costs - windows, timber etc etc (all purchased in France)  are not allowable costs. Is he right? I know english purchases cannot be included but thought French materials would still count  - deeply aggravating as our friends now want to renotiate the price we agreed.... any help would be appreciated. Thanks, Phylis    Report

07/04/2006, 13:05 Ron Avery Joined on 29/11/2004 Aveyron 12 Posts 3,428 Re: Ruling on 'allowable costs' when selling It seems that your Notaire is treating this as a CGT issue and not allowing anything that would not be claimable against CGT, only items supplied and  installed by a French registered artisan can now be offset against CGT.  As that is not the case here and you are trying to establish an asset value , I would suggest that you go back to the Notaire and ask him why he is dissallowing these items. Why not post a sensible answer, people will appreciate it more    Report

07/04/2006, 17:41 hastobe Joined on 01/01/2006 Posts 610 Re: Ruling on 'allowable costs' when selling It may be that the other parties weren't expecting their CGT to be as high (i.e. thought they could reduce their CGT by deducting the materials cost).  In which case the CGT calculation would be relevant - for them.  I know these sort of situations require a negotiation / compromise but I would be a bit annoyed too.  It sounds from your earlier posts on this subject that you have organised most of the work - on their behalf - and if there is CGT they have clearly benefitted from your efforts to improve the property.  Sounds like they want to have their cake and eat it. Presumably your friends are UK resident - if so they can still reduce their UK CGT liability by offsetting the Fench material costs... Hastobe    Report

07/04/2006, 18:05 BJSLIV Joined on 23/08/2004 Posts 2,519 Re: Ruling on 'allowable costs' when selling Ron The Notaire will have to do the CGT calculation following the rules you outlined because  he needs to calculate the gains and hence any potential tax liability on the friends disposal. I suppose it might come as a shock to the friends to find that  the tax liability is higher than they expected; presumably its  8% of the costs of all of the materials input. Its very hard to arrive at a solution that feels equitable to both parties, and is an easy way to make ex friends!      Report

07/04/2006, 18:35 phylisbide Joined on 10/01/2006 Posts 75 Re: Ruling on 'allowable costs' when selling Thanks for your comments The question is, though, is the notaire right to disallow the french materials for CGT? My understanding was that they are included as costs when doing the calculations. Perhaps I have misunderstood. The friends are going to be less in pocket than they originally thought - We are not talking huuuuge sums of money but I would like not to have to renegotiate a figure now. We are already out of pocket to the tune of half a house.....Also, these figures would in the future form the basis of our own CGT liability should we have to leave our lovely place in an idyllic village. Thanks, Phylis    Report

07/04/2006, 18:53 Mikew Joined on 23/08/2004 Aigre 16 Posts 286 Re: Ruling on 'allowable costs' when selling AFAIK Under new rules only factures from registered artisans are allowable, however, there is a 15% allowance for improvements against CG Tax.    Report

07/04/2006, 19:05 Teamedup Joined on 23/08/2004 Posts 5,950 Re: Ruling on 'allowable costs' when selling The trouble with this is that you aren't just transferring the house to you. It is being sold and then you are buying it. And as you are resident and they aren't I suppose that this will all be very very complicated. So yes, I would suppose that the notaire would follow the rules about captial gains.    Report

08/04/2006, 9:56 Will Joined on 22/09/2004 Sussex & 50 (Mortainais) Posts 5,174 Re: Ruling on 'allowable costs' when selling Mike W is right. Since, I think, the beginning of 2004, only TVA invoices from French-registered tradesmen are allowable against plus value (the French equivalent of CGT). However, if the house has been owned for more than five years then the notaire can apply a standard percentage for repairs and renovations, which can often work out more favourably. Will intentionally blank signature http://www.vienormande.com    Report

08/04/2006, 10:23 phylisbide Joined on 10/01/2006 Posts 75 Re: Ruling on 'allowable costs' when selling Thanks for your comments. Sorry to be dense but how can you offset French cost of materials against UK CGT? What am I missing here? Phylis    Report

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