Selling UK house to buy in France. What to do with money?
Discussion
Here's the background: My wife and I live happily in France and will be selling our London house in the new year. It ought to go for £1.5m
Once we have the cash (and have paid the small amount of CG tax) we intend to spend about €900k on a house in Bordeaux. (We haven't got one lined up. We will wait look seriously once we are cash buyers.)
Now the thing is I have never sold a place where I didn't immediately just buy another for more money. This will be the first time I have to put one and a half million quid somewhere, the first time I have ever had such an amount of money, and the first time I have had to change it all into Euros. But, this being Pistonheads, I'm sure some of you have, so:
What do we do with the sale proceeds? Just stick them in a bank account?
As they will all be going into Euros at some point, can we have them paid directly into a Euro account (should the exchange rate be favourable?)
Is there a high interest bearing account where such a sum is relatively protected, doesn't all get spunked on Aston Martin shares, and is relatively instant access?
Once we have the cash (and have paid the small amount of CG tax) we intend to spend about €900k on a house in Bordeaux. (We haven't got one lined up. We will wait look seriously once we are cash buyers.)
Now the thing is I have never sold a place where I didn't immediately just buy another for more money. This will be the first time I have to put one and a half million quid somewhere, the first time I have ever had such an amount of money, and the first time I have had to change it all into Euros. But, this being Pistonheads, I'm sure some of you have, so:
What do we do with the sale proceeds? Just stick them in a bank account?
As they will all be going into Euros at some point, can we have them paid directly into a Euro account (should the exchange rate be favourable?)
Is there a high interest bearing account where such a sum is relatively protected, doesn't all get spunked on Aston Martin shares, and is relatively instant access?
I am not an IFA but the answer might depend upon your tax status - if you still hold UK residency then you could put it into premium bonds (average return 4.65% but may be more or less) and as I understand no tax is payable on receipts
Alternatively a short term money market fund at somewhere like Vanguard is instant access and pays presently 5.16%
I do also wonder whether you might be able to put some into pensions or top up/set up this years ISA's
I am sure there will be other suggestions
Alternatively a short term money market fund at somewhere like Vanguard is instant access and pays presently 5.16%
I do also wonder whether you might be able to put some into pensions or top up/set up this years ISA's
I am sure there will be other suggestions
Not an IFA, just happen to have been in similar circumstances before.
For the love of all that’s holy do not ask them to send the GBP sale proceeds directly to an EUR account, you’ll get no choice in the fx rate and it likely won’t be favourable.
If you’re just stashing it until purchasing another house / deciding what to do with the remainder, then you could look at parking it in an NS&I income bond account, which is 100% backed by HM Treasury, and will pay out interest each month. The interest rate is low but that’s the price you pay for minimal risk.
When it comes to transferring GBP to EUR you can phone the currency desk at your bank (assuming at this point you’ve already withdrawn the money from wherever you parked it and it’s with your own bank) and ask for a quote, depending on the volatility of the currency at the time they’ll either give you a rate that’s valid for a few minutes or a few hours, based on the quoted rate you can then decide wether to proceed or not. The fx fees are normally tiered and when converting this much money the bank’s margin (spread) is normally small.
Not that much point in private banking IMO as they will want you to keep a certain amount either deposited or invested with them in-order to keep the account open. But they will give you a flashy debit card and dedicated account manager that you can phone.
And if anyone tries to talk you into anything that sounds too good to be true, it’s probably too good to be true.
For the love of all that’s holy do not ask them to send the GBP sale proceeds directly to an EUR account, you’ll get no choice in the fx rate and it likely won’t be favourable.
If you’re just stashing it until purchasing another house / deciding what to do with the remainder, then you could look at parking it in an NS&I income bond account, which is 100% backed by HM Treasury, and will pay out interest each month. The interest rate is low but that’s the price you pay for minimal risk.
When it comes to transferring GBP to EUR you can phone the currency desk at your bank (assuming at this point you’ve already withdrawn the money from wherever you parked it and it’s with your own bank) and ask for a quote, depending on the volatility of the currency at the time they’ll either give you a rate that’s valid for a few minutes or a few hours, based on the quoted rate you can then decide wether to proceed or not. The fx fees are normally tiered and when converting this much money the bank’s margin (spread) is normally small.
Not that much point in private banking IMO as they will want you to keep a certain amount either deposited or invested with them in-order to keep the account open. But they will give you a flashy debit card and dedicated account manager that you can phone.
And if anyone tries to talk you into anything that sounds too good to be true, it’s probably too good to be true.
NortonES2 said:
Kickstart said:
I am not an IFA but the answer might depend upon your tax status - if you still hold UK residency then you could put it into premium bonds (average return 4.65%
Not 1.5 million.For the risk averse that is what I’d do.
Avoid cash management platforms unless you can fully understand the risks associated with them and are comfortable with your exposure. Even if they spread money around for you, they are not risk free.
Sebastian Tombs said:
I am not UK resident. I’m fiscally French. ISAs and other UK tax saving vehicles have no benefit for me.
This might impact whether NS&I products are available to you. What would someone in France normally do to secure such a sum?No one has any idea which way the FX rate witll move i.e. in your favour or not. So work out roughly when you'll need the 900k and lets say its 30 days away. Then exchange 30k per day for 30 straight days. That way you'll get the average for the month in effect. If you've got longer then smaller daily switch.
Assuming that you are French resident for tax, then you could also be paying CGT there less what you pay in the UK. There system is much less generous with allowances and it is then taxed as income occurring in the year.
I used Vanguard as accumulating a number of consolidation certificates from different sources to declare to Impots can become a pain. Again that will be taxed as income in the year. A portfolio of rental properties would at least benefit from UK house-price inflation.
We could never find anything in France that we wanted to invest in.
I used Vanguard as accumulating a number of consolidation certificates from different sources to declare to Impots can become a pain. Again that will be taxed as income in the year. A portfolio of rental properties would at least benefit from UK house-price inflation.
We could never find anything in France that we wanted to invest in.
Contact French bank, see how many euros they will give you for the amount you wish to wish to send in sterling.
Contact UK bank, to see how many euros they will they will give you for the amount you have in sterling.
Place accordingly when you have a satisfactory amount of euros. On that amount you should be able to get a bespoke spot/forward rate from your sending bank or a bespoke spot/forward the receiving bank if you send them sterling.
Movement in currency exchange is you key risk here.
One month today on the above spot rates is -24k euro for example. Not selling the property last month has cost 24k euro (of course that could have increased)!
Once you have your designated currency where these funds will sit, then look at investment options.
Contact UK bank, to see how many euros they will they will give you for the amount you have in sterling.
Place accordingly when you have a satisfactory amount of euros. On that amount you should be able to get a bespoke spot/forward rate from your sending bank or a bespoke spot/forward the receiving bank if you send them sterling.
Movement in currency exchange is you key risk here.
One month today on the above spot rates is -24k euro for example. Not selling the property last month has cost 24k euro (of course that could have increased)!
Once you have your designated currency where these funds will sit, then look at investment options.
rdjohn said:
Assuming that you are French resident for tax, then you could also be paying CGT there less what you pay in the UK. There system is much less generous with allowances and it is then taxed as income occurring in the year.
We are Swiss citizens and tax-resident here since 1999. When we bought our holiday place in Burgundy in 2013, the French notary advised us to keep *all* renovation invoices in a very safe place to ensure that these 'plus-value" amounts could be deducted from any taxable gain upon resale.https://www.service-public.fr/particuliers/vosdroi...
Both France and Switzerland have a sliding scale of secondary residence CGT, and after 15 years of ownership it would be an effective rate of 8.3% in France (tapering to zero at 22 years), but still 10% (until 25 years when it goes directly to zero) in Switzerland. So in theory if we sold in 5 years time, after the French notary had deducted French CGT from the sale proceeds, Geneva would also tax me at 1.7% on any gain.
rdjohn said:
We could never find anything in France that we wanted to invest in.
The last thing I would consider our French property to be is a (financial) investment 
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