Must I pay capital gains tax?
I am told that if I have rented out part of my main residence for holiday rentals I have to pay capital gains tax on the sale of my house. I pay my taxes in France. Is this true? D.L.
It depends on how you rent and whether the tax service sees the activity as a business or not.
If you rent as a business it is likely the tax office would seek to tax an eventual capital gain. The tax would be proportional to the part of the building used for this purpose.
This may be likely if you had been renting out part of it long-term, for example. However if you only do occasional rental on a ‘tourist rental’ basis it is less likely to be treated as a business, in which case when you sell your home the gain made should not be liable to any capital gains tax.
There are many individual factors that can define whether a capital gain could be taxable so it may be best to seek advice from a tax professional who can confirm the position for you.
Reader's query answered by Hugh MacDonald
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