IF YOU are a buy-to-let investor who dreams of retiring in the South of France, do it quickly. At the moment there is a loophole in UK and French tax law which means that anyone with second or buy-to-let properties who moves permanently to France can sell their UK properties after they move without any liability to UK or French capital gains tax (CGT). This loophole is due to be closed once the UK/France Double Taxation Convention is ratified. This could happen any time, but would not take effect in France until January 1, 2008.

There are caveats: to qualify for the exemption, you would have to move to France and remain there for at least five years. Moreover, you must have left the UK in the UK tax year — not the calendar year — that precedes the tax year in which you sell your property. This means that the window of opportunity could be tight.

“People leaving the UK by April 5, 2007 would be leaving the UK in the 2006/7 tax year, and provided they were leaving the UK on a permanent basis — that is, for more than five years — they would be nonresident in the UK on the day of departure,” says Marjorie Mansfield, of Siddalls, which specialises in advising British expatriates. “If they sold later on in 2007, they would already be French tax residents for part of the French tax year, which runs from January to December, so would be subject to French taxation, which would not apply CGT on UK property.”

Siddalls: 01329 288641

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