Capital Gains Tax for real estate in France as of 1st of February 2012.

January 30, 2012 | Author: Henrik

The main home for french resident remain exempt from capital gains tax .

For secondary home: In terms of real estate gains, the tax is paid at the time of sale. The real estate capital gains are taxed at a flat rate of 19% plus 13.5% social charges. Or 32.5%.

EU Resident: If you are not resident in France, but you are resident in another EU country, the applicable capital gain rate is 19%, as no social charges are payable.

Non-EU Resident: If you are neither resident in France nor in a EU country the rate is 33.3%.

It is the notary who is responsible for the declaration to be filed and pay this tax on behalf of the seller.

The calculation of the gain:

The capital gain is the difference between the sale price and the purchase price of the property. The first is the amount contained in the purchase deed plus expenses incurred thereby. But the list is limited to: commission paid to an intermediary, diagnostics and certification costs, eviction costs, architectural fees for preliminary studies for a construction permit or fee for discharge of the mortgage.

The acquisition value is the amount mentioned in the act of purchase or, for property acquired at no cost but as a gift. This amount, lets call it “gift value”, is increased with the acquisition costs as the notary fees, or inheritance tax paid.

Finally, it is considered that the cost of construction, reconstruction, expansion, renovation or improvement. This time we retain the actual amount or a flat rate of 15% of the purchase price provided that the property has been owned for more than five years after its acquisition.

Applicable reductions:

If sold within 5 years of ownership: Capital gains are fully taxed at 32.5%
in case of sale between 6 and 17 years: A reduction of 2% per year
in case of sale between 18 and 24 years: A reduction of 4% per year
in case of sale between 25 to 30 years: A reduction of 8% per year
After 30 years the capital gain is fully exempt


(N.B. The guide above is no replacement from proper legal advice and could countain errors so use the information at your own risk!)

Posted in Real Estate in the French Riviera | Leave a Comment

Should we sign a “promesse de vente” or “compromis de vente”?

October 25, 2010 | Author: Henrik

Between the two options we will try to clarify the difference to help you to make the correct choice.

“Compromis de vente” (contract of sale) :

The “compromis” and the “promesse” are both regarded as sales agreements, where the “compromis” is regarded as the strongest. This sales agreement, sometimes called “promesse synallagmatique de vente” (bilateral sales agreement) is a contract in preparation for a final sale where the seller and buyer agree, each firmly and definitively.

Its effects
The “compromis” is equivalent to a sale, where the effects will simply be delayed until completion of drafting of the deed by the notary. If the seller or buyer refuses to appear at the notary on the appointed day, the other party may go to the court. Thus, to force the undersigned to carry out and fulfil his or her commitments, to be able to proceed with the transfer of ownership.

“La Promesse de vente” (promise to sell) – Unilateral sales agreement
Is a contract where the seller agrees to sell his property for a specified price, while the buyer reserves the right to buy or not, after a certain period (option period) fixed by the parties.
This “Promesse” must be registered within 10 days at the French Tax office at a costs of roughly 72 Euros.

Its effects:

Either the transfer of ownership takes place smoothly.

or

If the seller no longer honours the signed agreement because, for example, sold the property to another. The seller will be judged to pay a compensation to the buyer agreed in the “promesse” usually 10% of the agreed sales price. Morally: this type of sales agreement has little value! A sale can not be forced in court in the same way as a “compromis” can.

If the buyer refuses or misses the option period, the “promesse” is void. The buyer can not be forced to buy the property and can withdraw from the contract as well as get back the deposit.

The costs of drafting a “compromis” or “promesse”:

No cost difference in writing between the two contacts, but my vary according to the professional who writes:

- The estate agent generally includes it in its negotiation fees.
- The notary charges a fee “fixed” (between 250 € and 300 €).

AzurVilla Real Estate

Posted in Sales Contracts | Leave a Comment

How Real Estate agents and brokers works in South of France.

October 10, 2010 | Author: Henrik

Agents spend a significant amount of time looking for new properties that they obtain with the agreements by owners or collaborating agencies to place properties for sale within their portfolio. As the French agencies do not work with general listings, purchase clients tend to go to several agencies to see what the French markets have to offer, and by doing so risk visiting several properties more than once.

To avoid this mishap some local French agencies sometimes offers the possibility to sign an exclusive search mandate lasting generally three to six months. Here the mandated agents will visit all the other surrounding agencies with all the specific criteria deemed important for each client hence a more hand-picked selection can be offered. This way of proceeding will take away all the tedious time spent looking for agencies that speak your language, continuous explaining what you are looking for, and the annoyance of having to revisit the same properties.

Local real estate brokers and sales agents have a thorough knowledge of the real estate market in the communities on the French Riviera. They know which neighborhoods will best fit the clients’ needs and budgets. They are familiar with local zoning and tax laws and know where to obtain the best financing for the purchase of a property. Clients are always advised to ask as many questions as possible to get a better local understanding.

Once the buyer have found a dream property a price must be agreed. The real estate agent will then suggest a notary to represent the buyer if the buyer does not already have a contact.
A meeting will be setup between the buyer and the seller at the sellers notary office where the “Compromis de Vente”, equivalent to the “Contract of Sale”, will be drawn up by the notary. It sets out in full, all aspects of the transaction and includes the standard and any special conditional clauses. The deposit, customarily 5% – 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.

The next stage in the transaction is called the “Acte de Vente”, equivalent to “Bill of Sale”. The remaining 90% or 95% 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.

Generally all agents and brokers have the freedom to determine their own schedule to best fit the time table of purchase clients. Hence real estate agents and brokers often work irregular hours, evenings and weekends.
We from AzurVilla Real Estate would be happy to provide further detail to anyone who would like to know more about the French real estate market. Please visit our website at: www.azurvilla.com

Posted in Real Estate in the French Riviera | Leave a Comment

Is now the right time to be investing in Real Estate in the French Riviera?

October 4, 2010 | Author: Henrik

We say YES. In this declining market we start to see some great real estate bargains, but don’t look for a quick flip you should always be thinking long term in the South of France. You should ONLY look for properties that are well situated, with a lot of emphasis on calm areas with no traffic noise and preferably some type of open view, if not sea view is within your budget!

So, lets say you have found a property that is well situated in a calm area with a panoramic sea view. You might ask yourself how long does it normally take to sell such a fantastic property and still get your property’s worth, when selling. We from AzurVilla real estate will always calculate six months to one year to find the correct buyer. This waiting is well worth your investment as many of our properties are currently 30% under market value. Secondly we are seeing a steady increase of investors and property hunters which can only translate to steady price increase.

Finally, and probably, one of the most important reasons why so many invest here is the large diversity and number of good quality Michelin stare restaurants with Provençal gastronomy.

So if you’re ready and can look ahead you will find that we have several properties opportunities between St. Tropez and Monaco that are worth your time.

Some of these properties you can find on our website http://www.azurvilla.com

Posted in Real Estate in the French Riviera | Leave a Comment