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Buying a French property.
How to buy a property in France
The process and procedures of buying a property or house in France is very different to buying a property in the UK. In general France is slightly more bureaucratic than the UK and the process is as follows:
Initially you house hunt much the same way as you do in most countries - you visit agents, make viewings, second viewings and do your research. Once you have found the French property for you (be it a house, a villa, a gite or a chalet in the Alps) then the system differs;
Once a sale price has been negotiated, a Compromis de Vente (an initial legal contract) is prepared by the notary (legal agent) and signed by buyers and sellers
At this point the buyer pays a 10% deposit (non-refundable) and the balance paid on completion.
After the Compromis de Vente has been signed searches are carried out which takes around eight weeks. Then the Acte de Vente or final contract is signed and the property becomes the buyer.
When you buy a property in France VAT at 19.6% is applicable on a new property. This lasts for 20 years under French law. Should the property be sold within 20 years then the balance will be repayable to the French Treasury at the rate of 1/20th a civil year.
When a property is sold Capital Gains Tax at 33.3% is applicable. However the are various provisions that will decrease the tax payable and a notaire or an accountant should be able to advise.
Inheritance tax is also a consideration when buying a property in France as a dispersal of a French property will be conducted under French law even for UK residents who leave a legal Will.
The French Government introduced a 'leaseback' scheme to encourage
foreign property investment and has succeeded in making the purchase of
a property in France more appealing. The leaseback scheme entitles the
owner of a qualifying property a guaranteed rental income, exemption
from VAT (currently 19.6 per cent of the purchase price). Obviously this
is very attractive. It is only applicable for those buying property to
rent out as you can only use it for one to six weeks per annum.
The main tourist areas such as the Alps and the South of France have
benefited from the added influx of available rental properties and the
return is normally about 5-6% with a capital growth of about 10% per
annum.
Many types of property are available to buy on leaseback in France,
from old farmhouses to new apartments, from the Cote D'Azur to Chamonix.
As with buying any property the key maxim is location, location,
location. However the better the location the higher the price. The
advent of the budget airlines and rural airports has opened up new areas
of France for French property buyers. French properties for sale in
these areas are slightly cheaper as they are less exploited.
The Euro currency rate could have a dramatic effect on the
cost of buying a house or property in France - Get a no obligation quote for Euros and see how much you can save!
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