In recent times France has had a poor reputation with non-residential investors in property. They are suspicious of the French property market because of negative opinions chiefly from foreign media.
In fact, according to comparative fiscal studies, France has risen to the best place among the most attractive countries regarding tax and regulation in this area. Moreover, investors continue to want to buy luxury real estate in the country.
There are several advantages… Strength of rental prices, secure transactions, construction projects, tax advantages, new Eco-districts, economic dynamism throughout the country. It is a shelter for a long-lasting inheritance.
Acquisition fees are lower in France
As non-residents are gradually returning towards France, its property attractiveness is registering this tendency. This is a result of lower acquisition charges compared with other countries. In France, these charges including solicitor fees and administrative fees at different stages do not exceed 7 per cent of the total value of the property purchased. While in Great Britain for example, these fees can be as high as 12 per cent of the purchase price.
Added to this are “conveyancy” fees (lawyer, legal or professional administrative charges and Land Registry fees) rising between 0.5 and 1 per cent of the purchase price of the property. In Italy, purchase fees payable by non-residents are between 10 and 15 per cent of the property price, excluding solicitor fees. In Spain, there is a deposit to pay which is set between €3000 and €6000 as well as a transfer tax on properties totalling between 8 and 11 per cent of purchase price. So property purchase fees are very competitive in France.
A more advantageous taxation on rental returns and inheritance in France
Non-residents can freely invest in French property. Whether it be preparation for retirement, increasing your savings or keeping a holiday base in France, investment in stone is a better opportunity for foreign returners, especially rental investment.
In France, rental income is liable to a tax of 20 per cent and to social security tax of 15.5 per cent, against 30 per cent in Florida, 15 per cent in Italy and 10 per cent in Britain. But along with this, there are several opportunities available to deduct charges such as mortgages in the case of seasonal furnished rentals. This helps to reduce the tax base.
French legislation remains fluid with regards to taxing inheritance. This tax only applies to a net inheritance above €1,300,000, while in other countries, like Switzerland, every euro is subject to inheritance tax. In Spain, tax is due above €700,000. There are different ways of reducing this taxable inheritance value below this threshold for non-residents.
An interesting tax on capital gains at re-sale in France
If industrial investment has a certain dynamism, so does property investment.
Property on the Côte d’Azur always attracts European and International clients who want to spend time in the sun as well as clients from the rest of France.
Stock-broker investments have a new volatility, which shows the attraction of investment in stone as well as the fact that interest rates have never been so low.
On the fiscal level, capital gains on the sale of the main residence is still totally exempt, with no delays, while for non-residents the single imposition rate of 19 per cent is applied, whatever their country of residence, a distinction between EU countries and the rest of the world. (The 33.33 per cent rate has been abandoned).
There is a reduction in capital gains after 5 years of ownership. For example, capital gain is reduced by 6 per cent if the property is resold after 6 years, by 30 per cent after 10 years, by 60 per cent after 15 years and by 90 per cent after 20 years, with total exemption after 22 years.
Social security deductions are always due today at 15.5 per cent of capital gains, reduced according to the year of ownership, with complete exemption after 30 years.
Naturally the seller’s charges are always deductible in the calculation of capital gains:
- The Property Transfer fees or ” solicitor fees ”: the real total or deposit of 7.5 per cent of purchase price
- The agency fees paid by the seller
- Construction or renovation work paid by bills or 15 per cent deposit of purchase price, without proof, if re-sold after 5 years.
Contrary to popular belief, France actually has many opportunities for foreign investors. This is further evidenced by the fact that recent years have seen an increase in the number of foreign buyers. A result of appealing tax policies, high real-estate potential and relatively low purchase fees, France has become one of the most profitable options for real-estate investment.
France has also signed quite a number of bilateral conventions to avoid double taxation on incomes of taxpayers working and living in the country.