Buying Property in France
December 12, 2012 - France
Where do most foreigners buy property?
Most foreigners buy in Provence and Cote d'Azur in the South of France (25 per cent), for proximity to the Mediterranean Sea and for the warm climate and lifestyle; in the Alps (16 per cent) because of the famous ski resorts; and in Paris (15 per cent) for its strategic position in the heart of Europe.
What are the properties usually used for?
Most of the properties are bought as vacation homes and investment properties. Vacation homes are generally used by the owners one or two months per year, allowing them to let the properties to tourists for the remaining periods.
Are there special restrictions or regulations for foreign buyers?
No restrictions apply to foreigners who wish to purchase a property in France.
Do regulations change according to property type?
Yes, the regulations do change, though steps and procedures for purchasing mainly remain the same. When buying a vineyard in France, for example, you will in most of the cases have to make the acquisition through SAFER, the government body responsible for agricultural lands.
The purpose is clearly to drive away speculators from buying properties that could otherwise easily be turned into five-star hotels or golf courses or dismantled into construction land when close to booming cities.
What are the legal processes involved with property purchases?
A purchase of a property has two stages: first the compromis de vente or sales agreement, and then, l'acte de vente, the final deed of sale, jointly signed with the seller.
The process involves a deposit of guarantee (10 per cent) and legal fees paid to the Notaire who drafts the final agreement. After about six months you will receive your title of ownership: titre de propriété.
What taxes should buyers be prepared for?
Property tax: Only owners of property in France pay this tax. It is payable even if the property is inhabited, providing it is furnished and habitable.
Local tax: this tax is calculated on the basis of the property's rental value.
It is payable to anyone who lives in a property in France, whether an owner or a tenant. It is also payable no matter whether the property is a second home or a principal residence.
Rental income tax: 25 per cent for the non-residents. The net French source rental income is generally taxable in France, yet several charges can be deducted from the rental income.
Capital gain tax: Gains derived from the sale of a property held for two years or less (short term gains) are taxed as ordinary income for residents and 26 per cent for non-residents.
What are the risks involved?
As a foreign buyer there are several risks buyers should be aware of, for example paying well above what any local purchaser might pay. Buyers should make sure the estate has a clear title and also be aware of the area's urban planning.
What advice would you give to a potential investor?
I would recommend to any person who wishes to purchase a property in France to be advised by an objective and impartial expert who speaks English and who will completely assist the investor to surmount the different barriers which exist: linguistic, procedural, fiscal and sometimes cultural.
Source: LP Luxury Property
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