All was going smoothly until stepmother became a tax payer in France?

All was going smoothly until stepmother became a tax payer in France?

16:11 PM, 7th December 2020, About 3 years ago 4

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Hi, I have a flat that I live in with my young daughter. I originally bought it with a partner and we split.

His name was removed from the mortgage and my father was going to guarantor, but he was deemed to old so my stepmother added her name to my mortgage. She has made no contribution and has never lived here – it was purely to help with the mortgage requirements as I am a freelancer.

She is due to turn 72 in 22 months. My mortgage product expires in March and I have a new mortgage product lined up in my sole name.

My stepmother is happy to transfer her name off my deeds for no remuneration – she clearly states she has no interest in the property. She moved to France and in April of this year became a tax payer there.

All was going smoothly until she went to her french notaire to sign the TR1 form and an ID1 form only for the notaire to tell her she would be liable for 60% capital gains tax should she sign herself off my deeds.

I am so very confused as she made no financial contribution to the flat. I am now in a tight spot as we cannot proceed with her on the mortgage as that means paying the mortgage back in full either by March when this product expires or over the next 20 months at a higher interest rate.

What options are open to me?

I don’t want to sell or move home?


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Dylan Morris

9:53 AM, 8th December 2020, About 3 years ago

It appears your step mother owns the flat with you as she is on the title, hence the TR1 form. I’ve no knowledge of French capital gains rules but would seem logical to assume your step mother would be liable for tax for her share of the uplift in the flat’s value (ie. profit) since she became part owner of the property. I suggest you speak to a financial advisor in France who knows how CGT works over there to see if there are any allowances she can use to reduce the liability.
I’m not sure though why she needs to be removed from the title. Can you not simply remortgage in joint names ?

user_ 7167

10:41 AM, 8th December 2020, About 3 years ago

Obfuscated Data

Chris Wheelwright

10:57 AM, 8th December 2020, About 3 years ago

If your stepmother has never had any beneficial interest in the property then she can have no capital gain. Whilst the French authorities may not have the same distinction between legal and beneficial interest (I do not know) the question of whether there is a gain arising must surely be governed by English law. I would ask your stepmother to come back to the UK for a weekend and sign the TR1 and ID1 in front of a UK solicitor !
This is a personal view I am not a legal practitioner in either jurisdiction.

Paul Shears

18:26 PM, 8th December 2020, About 3 years ago

It's just a thought, but you know it is difficult enough in your own country to judge a person's competence. You might consider checking with several other people claiming to be "experts" in France to see if you get the same story.
I bet the stories will vary and sadly, if that is the case, you have a lot of research to do.
I suspect that the advice from Chris Harris above, might prove invaluable.

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