French Property and TAX GUIDE
French Property and TAX GUIDE

This was an unused side box to an article about auctions. I thought I might as well post it here ...

This is only an outline. As ever with purchases, seek specialist advice before signing on the dotted line. I am not a lawyer but I have bought and sold four times in France so have experience. The problem is that not only do laws change all the time, but also the internet has changed and is changing the relationship between the state and the individual.  Each individual has different circumstances, attitudes, goals and needs, one size never fits all.

So "Caveat emptor" as the Latin would have it and now read on.

French Property Buying guide.

French property purchases follow a procedure starting from an offer ( offre d’achat ) which if agreed between theparties leads to an initial signing of a contract (either a promesse de vente compromis de vente ) followed later by a final signing and transfer of property ( actede vente) . All of this takes place under the supervision of a notaire or, as is often advisable, two notaires, one for the buyer and seller. A deposit of ten per cent is usual on signature of the compromis and estate agents fees and French stamp duty taxes are paid at the signature of the acte de vente . Typically contracts are lengthy with many clauses relating to property being sold and the price as well as an ever increasing array of legally required diagnostic reports on the property. Conditional clauses or conditions suspensives can be included in the compromis giving options for financing.

Since June 2001 the purchaser has had a 7 day cooling off period following the signature of the compromisde vente during which they have the right to withdraw from the purchase.

Dawn Alderson, from the French department of law firm, Russell-Cooke LLP comments “Specialist advice at an early stage in the transaction is advisable for those looking to buy in France. The French conveyancing process is not aligned withthat in England and Wales and foreign buyers can find themselves in difficulty if proceeding without proper advice. Often, for instance, a buyer may have a proposed ownership scheme in mind, such as opting to buy through a family trust but the potential tax and other implications of this should be fully investigated before committing to the purchase”.

www. russell cooke

French property taxes.

The main taxes payable by property owners in France are listed in a buying guide published by BNP Paribas. (Further information can also be found at . )

Both residents and non residents property owners in Franceare liable to pay taxes on their property in a number of ways.

Local Taxes (Taxe fonciereand Taxe d’habitation)

Every home and land owner in France must pay Taxe Fonciere which is based on the rateable value of the property according to location, type of building, surface area and level of comfort, but is also based on your income.

Occupancy Tax, or Taxe d’habitation, is also payable if your home is your main or holiday residence. The tax is based on the rental value as defined by the land registry and local authorities.

Income Tax.

You will be liable to pay income tax on income derived from your property, i.e rent received if you let the property. Taxable income may be reduced through a certain number of deductions such as maintenance and repair expenses or interest payments on loans used to finance the purchase.

Bi lateral conventions exist between countries to protectindividuals from paying tax twice.

Wealth Tax.

Impôt de solidarité sur la fortune (ISF) may be payable by some French property home owners whether you are tax resident or non-resident. French tax residents will pay ISF calculated on the net taxable value of their worldwide assets. Non-residents pay only on the assets owned in France (with some asset exemptions). The threshold for wealth tax liability is currently 1,300,000 euros but once the threshold is passed it is payable at a banded rate from 800,000 euros.

Capital Gains Tax

When you come to sell any capital gain will be considered as income and in most cases subject to tax. There are certain exemptions so it is advisable to check you liability before you sell.

Social Contributions

The EU’s Advocate General has issued an opinion about the social contributions charges (CSG and CRDS) which were introduced in 2012 by the Hollande government. If the European Court of Justice follows this opinion inits ruling expected in January on the case Ministrede l’Economie et de Finances v Gerardde Ruyter France may be forced to reimburse those charges.

Robert Kent of Tax and investment consultancy, Kentingtons, comments“ There have been several rectifying budgets in the last two years,many making alterations to the taxes applied to properties. Just recently, with the social contribution charges, non-resident property owners were given only amatter of days over the Christmas period before the 31 December 2014 to lodge a claim for a refund"

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