INFORMATION AND TAXES
The guide below is brief and general that is no substitute for proper professional advice, which we will be happy to provide on request.
Agency commission is normally payable by the seller.
Compromis de Vente
The “Compromis de Vente” is the equivalent to the “Contract of Sale” drawn up by the notary. It sets out in full, all aspects of the transaction and includes standard and any special conditional clauses. The deposit, customarily 10%, is paid to the notary at this time. Once signed by both parties, the contract is only mutually binding after giving the buyer 7 days time of consideration.
Acte de Vente
The “Acte of Vente” is equivalent to “Bill of Sale”. The remaining 90% balance of the purchase price plus the notary's fees must be in the notary's possession in advance of the signing of the “Acte de Vente”. As with the “Compromis de Vente”, buyer and seller are present, unless represented by Power of Attorney. The signed document remains in the notary's archives. Once published with the Land Registry, a copy is subsequently available to the purchaser.
The notary collects purchase taxes on behalf of the French State, which are calculated on a sliding scale according to value of the property. The notary's own legal fee for the conveyance is added about 1%. Together, these total approximately 6.2% - 6.5% for villas older than 5 years. Villas 5 years and younger not previously sold by a trader will benefits of a reduced sale tax giving a total approximate notary fee of 3% - 4%.
There are two local taxes which are levied on all French properties. The “Taxe d'Habitation” is paid for the year by the owner (or tenant) who lives in the property on the 1st January. The “Taxe Foncière”, which relates to buildings and land, is split pro-rata between buyer and seller. Bills arrive in the Autumn for the current calendar year.
Property insurance becomes the purchaser's responsibility immediately on completion. The existing insurance policy can be transferred or a new agent appointed. AzurVilla can provide the new owner a new policy.
Taxe sur la valeur ajoutée (T.V.A.)
This is the French equivalent of VAT (Value Added Tax). It is paid when you buy a new property before it is completed or it is sold - for the first time - within 5 years of its completion. In addition to TVA you will also have to pay a publicity tax of 0.6% of the net purchase price. The General TVA from the 1st of January 2002: 19.6%
This is the main local property tax affecting owners of properties in France.
The amount of the tax is calculated by reference to the "valeur cadastrale" (official value of the property) registered in respect of all properties in France.
The percentage of that valeur cadastrale charged as tax varies from area to area.
There are three kind of land related tax, The "Taxe d'Habitation" which is a residential tax, the "Taxe Foncière", payable by all home / land owners and the Taxe professionelle , business rates payable by all traders carrying on non-salaried activities.
A person resident in France for tax purposes and non-residents with substantial assets in France, (770 000 Euros for 2008) must, every year, submit a wealth tax return.
This must show the value of all of that person's assets located in France. Valued as at 1st January of each year.
This will normally be the person's house, car and the balance on his bank account.
The value to be used when declaring the value of the house is the official valeur cadastrale (see property taxes above). The basis of the tax calculation is the same as for the inheritance tax.
The tax payable are calculated according to a sliding scale between 0.5% and 1.5% of the value of the taxable estate.
The wealth tax return must be paid to the Authorities at the latest on 15th June of each year.
Capital Gain Taxes
The French have a sophisticated system of assessing Capital Gains Tax, which distinguishes between short and long term gains and gains realised by individuals and those made by businesses. For people resident in France for tax purposes, non-business related Capital Gains are classified and calculated according to the nature of the good sold.
For people not resident in France for tax purposes, Capital Gains Tax is payable at a flat rate 33% on the difference between the price for which the article was sold and the price paid for it. Indexation for inflation and allowances are applied to reduce the taxable gain. The first two years of ownership are not counted. The transaction is tax free (in most cases) if the property has been owned for more than 22 years.
In the typical example of the sale of property, the prices used to calculate the tax liability are those declared in the Title Deed.
We can accept no responsibility for any action that you take or fail to take as a result of reading this document.