The French Property Market

If you are looking for a property in France here are some tips to consider.

The French property market is highly attractive to expatriates. 

There are no restrictions on foreign ownership of real estate in France but the rules relating to the purchase and re-sale can actually depend somewhat on the type of property and the area where the property is located.

E.g., the rules relating to the purchase of a vineyard will differ to the rules attributed to purchasing a freehold house.

It is always wise to appoint an independent solicitor to look out for your interests when purchasing any property - especially if purchasing in a ‘foreign’ country.

The buying process France will usually follow this general path: -

• An agreement is reached between the vendor and purchaser on the property purchase price.
• A solicitor or notary will draw up a legally binding contract which both parties must sign.
• A 10% deposit is paid at this point.  This money should be held in a secure account until the purchase completion.
• The property in France that you have chosen will be withdrawn from the open market and the legal system begins its checks and surveys.
• If the purchaser pulls out of the contract at this stage the deposit would be lost.
• Upon satisfactory completion of all checks, a final contract will be signed by both the vendor and purchaser at the Notary’s office.
• The deeds will pass to the buyer, the land registry will be updated.
• And of course the balance of the purchase price will then be payable!

The appointment of a Notary is mandatory.  S/he will require a copy of your birth certificate translated into French and, if applicable, a copy of a marriage certificate as well, also translated.

The Notary fee will be about around 3% of the property price, transfer tax 7.5% (less than 1% for new properties) and registration fees will be about another 6%.

Estate agents fees can top 15%, but are usually between 7 and 8% - please check whether you are liable for these before you go forward with considering a property.

On going - property taxes are levied on a property and residential tax is payable for living as an owner occupier or as a tenant.  Both taxes are calculated on the average property rental values.

In France the Capital Gains Tax regime changed in January 2004, thank you to Andrew Chapple for pointing this fact out to me.

A basic overview of the current situation regarding capital gains taxation on real estate follows - please seek professional advice to understand your position fully, as Shelter Offshore are not experts in French taxation: -

If you are resident in France for taxation purposes then any gain you make from the sale of ‘real property’ will have any allowances taken from the taxable amount before being taxed at 26% (this figure includes the CSG and CRDS social charges of 10%).

If you are non resident in France for taxation purposes then any gain you make from the sale of ‘real property’ will be taxed at 16% if you are a resident of an EU member State.

If you are not a resident of an EU member State then the gain will be taxed at a flat rate of 33 1/3%.

For residents selling their principal residence in France gains may not necessarily be subject to taxation.

For both residents and non residents, any gain made from the sale of ‘real property’ may be subject to the following discounts before taxation is applied - depending on the circumstances: -

A tax discount of 10% a year is applied starting after the fifth year the property is owned - this means that a gain made from a property held for some 15 years will be free from any capital gains taxation liability.

Certain renovation or improvement work completed on the property can sometimes be deducted from the gain.

After five years of ownership the vendor can add 15% to the purchase price in place of the actual cost of any renovation or improvement work.

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