Investment in France by a non-resident
Real estate investment in France, particularly on the Riviera, is historically and economically very attractive: solid values, profitability, political and economic stability.
Values are particularly strong in prestigious areas sought after by overseas clients: Close and around the Principality of Monaco, Saint Jean Cap Ferrat, Beaulieu sur Mer, Villefranche sur Mer and in the residential areas of Nice.
It should be noted that there are no legal restrictions for non-residents investing in France.
You will no doubt have specific needs, whether buying to speculate, investing for a family wealth portfolio or just seeking a safe and pleasant location you will need to anticipate easy inheritance and understand the tax issues.
In this context, the notary’s assistance becomes paramount, not just in handling the transfer of property in perfect security, but also in guiding the client in wealth planning with the modality of property ownership most adapted to his needs.
Moreover, as a counselor the notary needs to be capable of understanding the psychology and culture of overseas clients of very different origins. A lawyer or notary with these skills will be able to make the whole operation much more reassuring for the client.
1. The French notary’s role
It should be remembered that a French notary is both a public officer, the only person authorised to record sales, register mortgages and donations, and a legal counsel with a very high level of competences; he is therefore both a “lawyer” and “solicitor”, with the power to authentify the acts he receives but who has no role in litigation: if anything his services will help avoid this.
He is also responsible for the successfully completing the operations he handles, and is the guarantor, along with the other French notaries, for his clients.
As part of his mission, he will have to make sure that the property sold legally exists and is not encumbered with mortgages, that the client is aware of all the legal particularities which will come to light during his mission of verifications. He will have also to check that the clients have the capacity to sell or acquire and that the funds in involved in the transaction are of legal origin.
2. Wealth planning
Depending on his level of experience with overseas clients, the notary chosen will take into account the particularities related to the legal and tax systems and contexts of the country of origin (especially with regard to British, American, Russian or Middle Eastern clients), both from a point of view of the principles of family law (marital and inheritance rules) and taxation (French and / or country of residence).
This approach will optimize the choice of structuring the acquisition envisaged by foreign clients, either by simply purchasing in one’s own name, or by purchasing through a company.
It is important to go over the consequences of owning real estate in France, particularly fiscal obligations, and taking into account reselling in the future, whether it involves private real estate capital gains or corporation tax, the solutions for reducing wealth tax with the deductibility of bank debts related to the real estate, and how to optimize transferring the acquired property.
The choices will ultimately be made to suit the clients needs, whether the purchase is being made for speculative and probable short-term investment, for long term family investment organised for ease of transfer, or with the aim of obtaining income from renting, especially from holiday rentals.
Wealth planning will also be discussed with the client, taking inheritance into consideration by means of inter vivos donations or wills, with (depending on the clients country of tax residence) the possibility of taking advantage of the French rules for the division of property, ie : parents who can retain the usufruct rights to the property or shares of the company that owns it.
As can be seen, investing in real estate in France involves a little investigation with a competent notary capable of considering personal requirements from the outset and advise on the best way to invest, envisage transmitting future wealth in the context of both French and foreign legal systems while highlighting taxation aspects which are often decisive in the choice of the strategy finally adopted.