Buying a property in France
Investing in France as a foreigner
The acquisition, ownership and sale of a real-estate asset in france, as a main or second residence, must comply with specific rules. Any investor who is not a french national must be aware of them. Here are a few of the most important rules one should know.
Foreign buyer, investing in France means opting for attractive and quality real estate, offering bright prospects for capital gains! However, you must be aware of certain specific details about bricks and mortar in France.
Expect to pay «notary’s fees», an obligatory step towards acquiring a property
In France, in addition to the sales price, you are required to pay transfer fees (known as «notary’s fees»). They are received and collected by notaries, responsible for registering and authenticating sales contracts. As well as the notary’s expenses, these fees include various duties and taxes which are transferred to the State or local authorities, together with «expenses» (funds paid to the cadastral department, land registration services or «syndic» management agency). For old properties, their amount ranges from 7 to 8% of the purchase price. For new properties, they amount to 2 to 3%. Since the reform introduced by the so-called «Macron» law of August 6th 2015, these rates have fallen by 1.40% on average.
Co-ownership, a special French case
Whatever the property, you may be confronted by the co-ownership concept. Its purpose is to safeguard your interest and relationships between the various owners of one and the same property (an apartment building, for example). This specifically French notion is close to that of the «condominium» in the USA or «commonhold» in the UK. Co-ownership regulations govern the life of the collective accommodation shared by the owners and define, for example, voting methods for undertaking repair work or maintenance expenses for the communal premises. In a co-owned property, the «syndic» or management agency is the entity entrusted with administration and management of the building.
Capital gains tax on real-estate assets when they are sold
Any profits derived from the sale of a second residence are subject to capital gains tax on real estate. An obligation which must be fulfilled by both French and foreign owners, though there are a few exceptions: expropriations, operations involving division of a property…
The tax office allows you to benefit from certain allowances beyond the 5th year of ownership of the property. In practical terms, they result in full exoneration from taxation if you sell your property after having owned it for 30 years. However, prior to the 22nd year of ownership, capital gains are taxed in principle at the rate of 19% by way of income tax, and 15.5% by way of social contributions, ie. 34.5% in all. If they exceed 50,000 euros, they become subject to a surcharge which is added to the previous taxes, calculated on a scale ranging from 2% (profit over and above 50,000 euros) to 6% (over and above 260,000 euros).
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