PURCHASING FRENCH PROPERTY: PERSONS INVOLVED
The estate agent
Most properties in France will be offered through an estate agent (agent immobilier). The estate agency profession in France is highly regulated and in order to work as an estate agent a professional license (carte professionnelle) is required. To obtain the carte professionnelle, an estate agent has to fulfil a number of requirements including having attained a certain level of qualification or experience, and hold professional indemnity insurance and a financial guarantee. However, you may not always deal with the estate agent or one of his or her employees, but instead with somebody who has the status of a commercial agent (agent commercial). Commercial agents are self-employed people linked to the agent by a contract; they are entitled to show the property and close deals on the agent’s behalf. The status of some people can be unclear and you should always ensure that you are aware of what their actual status is. You are entitled to see their professional registration papers ('carte grise') as well as proof that they hold the requisite professional indemnity insurance. A commercial agent should always provide details of whose 'carte' they work under in their own publicity material.
In certain cases, properties may be marketed by individuals. Bear in mind when buying from an individual that you do not have the benefit of the agent’s professional indemnity insurance should there be problems. In addition, you will not have the benefit of a professional's expertise to advise and assist with the sale. Should somebody show you a property purportedly for sale by an individual and ask you for a fee for their services, he or she is not entitled to do so if they are not an estate agent, commercial agent or an employee of the estate agency with written authorisation (a mandate) from the vendor to sell the property on his or her behalf.
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
mercredi 17 février 2010
jeudi 11 février 2010
COMPASS IMMOBILIER: TAXATION Part 3 - Wealth and Property Taxes
WEALTH TAX
This is a tax applicable to assets valued over 790,000 Euros and is called ISF or l’impôt de solidarité sur la fortune. For a non-resident, it is payable on the value of property owned in France; for a resident, it is payable on all assets (unless certain assets come within one of the categories of full or partial exoneration). The tax is payable on a sliding scale as follows:
Between 790,000 Euros and 1,290,000 Euros 0.55%
Between 1,290,000 Euros and 2,530,000 Euros 0.75%
Between 2,530,000 Euros and 3,980,000 Euros 1%
Between 3,980,000 Euros and 7,600,000 Euros 1.3%
Between 7,600,000 Euros and 16,540,000 Euros 1.65%
Above 16,540,000 Euros 1.8%
PROPERTY TAXES
There are two principal types of property tax:
· land tax (taxe foncière)
· occupancy tax (taxe d’habitation)
Both are calculated on the basis of the notional rental value of the property upon the first of January of each year. They are payable annually and the bills come out in the autumn.
Payment of the land tax is usually divided pro rata temporis between vendor and purchaser on the basis of the completion date of the purchase. The purchaser will be responsible for refunding any tax paid for that period directly to the vendor.
The occupancy tax is payable by the occupant of the property on the 1st January of any given year for the entire year. The purchaser, or other occupant, will be responsible for paying it for the year following the purchase and it is not divided in the same way as the land tax. The tax is payable on second homes but no liability arises if they are not furnished. The television licence is now included within this tax.
An estimate of the amount of the two taxes can often be provided at the time of viewing the property or at the first contract stage based upon the vendor’s contribution for the previous year.
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
This is a tax applicable to assets valued over 790,000 Euros and is called ISF or l’impôt de solidarité sur la fortune. For a non-resident, it is payable on the value of property owned in France; for a resident, it is payable on all assets (unless certain assets come within one of the categories of full or partial exoneration). The tax is payable on a sliding scale as follows:
Between 790,000 Euros and 1,290,000 Euros 0.55%
Between 1,290,000 Euros and 2,530,000 Euros 0.75%
Between 2,530,000 Euros and 3,980,000 Euros 1%
Between 3,980,000 Euros and 7,600,000 Euros 1.3%
Between 7,600,000 Euros and 16,540,000 Euros 1.65%
Above 16,540,000 Euros 1.8%
PROPERTY TAXES
There are two principal types of property tax:
· land tax (taxe foncière)
· occupancy tax (taxe d’habitation)
Both are calculated on the basis of the notional rental value of the property upon the first of January of each year. They are payable annually and the bills come out in the autumn.
Payment of the land tax is usually divided pro rata temporis between vendor and purchaser on the basis of the completion date of the purchase. The purchaser will be responsible for refunding any tax paid for that period directly to the vendor.
The occupancy tax is payable by the occupant of the property on the 1st January of any given year for the entire year. The purchaser, or other occupant, will be responsible for paying it for the year following the purchase and it is not divided in the same way as the land tax. The tax is payable on second homes but no liability arises if they are not furnished. The television licence is now included within this tax.
An estimate of the amount of the two taxes can often be provided at the time of viewing the property or at the first contract stage based upon the vendor’s contribution for the previous year.
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
mardi 9 février 2010
COMPASS IMMOBILIER: TAXATION Part 2 - Capital Gains tax
CAPITAL GAINS TAX
This is paid on the profit earned when a property is sold. The tax is calculated and paid upon completion of the transaction. The sale of the principal residence is exonerated from capital gains tax.
The rate of capital gains tax is 16% for an EU resident; 33.33% for a non-EU resident; and 27% for a French resident. Once property has been owned for more than five years, tapered relief of 10% per annum can be claimed, culminating in exoneration from capital gains tax after ownership for more than 15 years.
Unless property has been owned for more than 5 years, it is only possible to deduct certain renovation and construction costs which have been invoiced by a registered enterprise. After 5 years, 15% of the original purchase price can be offset against the gain to represent such costs where it is no longer possible to prove their actual value. This is applicable regardless of whether any work has actually been done.
There is a one-off exoneration applicable to EU citizens who have been tax resident in France for two years at some point in the past. The property must not be let out in the year of sale in order to benefit from the exoneration. It is now possible to benefit from this exoneration upon a second sale if it occurs more than five years after the first one, subject to conditions.
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
This is paid on the profit earned when a property is sold. The tax is calculated and paid upon completion of the transaction. The sale of the principal residence is exonerated from capital gains tax.
The rate of capital gains tax is 16% for an EU resident; 33.33% for a non-EU resident; and 27% for a French resident. Once property has been owned for more than five years, tapered relief of 10% per annum can be claimed, culminating in exoneration from capital gains tax after ownership for more than 15 years.
Unless property has been owned for more than 5 years, it is only possible to deduct certain renovation and construction costs which have been invoiced by a registered enterprise. After 5 years, 15% of the original purchase price can be offset against the gain to represent such costs where it is no longer possible to prove their actual value. This is applicable regardless of whether any work has actually been done.
There is a one-off exoneration applicable to EU citizens who have been tax resident in France for two years at some point in the past. The property must not be let out in the year of sale in order to benefit from the exoneration. It is now possible to benefit from this exoneration upon a second sale if it occurs more than five years after the first one, subject to conditions.
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
mercredi 3 février 2010
COMPASS IMMOBILIER: TAXATION Part 1 - Income Tax
INCOME TAX
Income tax is a consideration for those purchasing French real estate property in two situations: firstly, if the property is to generate an income by being rented out; secondly for those who become French residents.
The French tax year is based on a calendar year and returns are filed in the following spring e.g. spring 2010 for income earned in 2009. Non-residents file returns to the ‘Centre des impôts des non-résidents’ in Paris. The method of calculation of the tax due varies according to the nature and type of income. For example, if property is rented out furnished the tax is payable under the BIC regime. Under this regime, for income below either 80,300 Euros (furnished lets such as hotels, 'chambres d'hôtes', rural gîtes, furnished tourist lets) or 32,100 Euros (other types of furnished lets), it is possible to opt for taxation on a simplified basis (known as ‘micro-entreprise’) with a fixed deduction representing costs of either 71% or 50% (the latter being applicable to furnished lets) being applied to arrive at the taxable amount. As for unfurnished letting, for income below 15,000 Euros tax can be paid on a similar simplified basis (known as ‘micro-foncier’) with a fixed deduction representing costs of 30% to determine the amount upon which tax is payable. The new simplified regime of auto-entrepreneur may also be a possibility for this type of activity.
Those who become French tax residents are liable to taxation on their income wherever it is earned and regardless of whether or not it is not repatriated to France. The principal criterion for determining tax residency is physical presence in France e.g. more than 183 days out of a given calendar year.
Deductible personal allowances and relief are applied to the individual and the personal quota is determined. Factors taken into consideration include marital status, number of dependent children, age... The level of tax is calculated in accordance with the following sliding scale (figures for income tax for the year 2009 for which the return is submitted in 2010):
0% not exceeding 5 875 EUR 5.50 % between 5 875 EUR and 11 720 EUR 14 % between 11 720 EUR and 26 030 EUR 30 % between 26 030 EUR and 69 783 EUR 40 % above 69 783 EUR
Non-residents normally pay tax at a base rate of 20% with any tax falling into the higher brackets payable in accordance with the superior bands. The rules on the avoidance of double taxation are governed by any double taxation treaty between the country of residence of the individual and France.
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
Income tax is a consideration for those purchasing French real estate property in two situations: firstly, if the property is to generate an income by being rented out; secondly for those who become French residents.
The French tax year is based on a calendar year and returns are filed in the following spring e.g. spring 2010 for income earned in 2009. Non-residents file returns to the ‘Centre des impôts des non-résidents’ in Paris. The method of calculation of the tax due varies according to the nature and type of income. For example, if property is rented out furnished the tax is payable under the BIC regime. Under this regime, for income below either 80,300 Euros (furnished lets such as hotels, 'chambres d'hôtes', rural gîtes, furnished tourist lets) or 32,100 Euros (other types of furnished lets), it is possible to opt for taxation on a simplified basis (known as ‘micro-entreprise’) with a fixed deduction representing costs of either 71% or 50% (the latter being applicable to furnished lets) being applied to arrive at the taxable amount. As for unfurnished letting, for income below 15,000 Euros tax can be paid on a similar simplified basis (known as ‘micro-foncier’) with a fixed deduction representing costs of 30% to determine the amount upon which tax is payable. The new simplified regime of auto-entrepreneur may also be a possibility for this type of activity.
Those who become French tax residents are liable to taxation on their income wherever it is earned and regardless of whether or not it is not repatriated to France. The principal criterion for determining tax residency is physical presence in France e.g. more than 183 days out of a given calendar year.
Deductible personal allowances and relief are applied to the individual and the personal quota is determined. Factors taken into consideration include marital status, number of dependent children, age... The level of tax is calculated in accordance with the following sliding scale (figures for income tax for the year 2009 for which the return is submitted in 2010):
0% not exceeding 5 875 EUR 5.50 % between 5 875 EUR and 11 720 EUR 14 % between 11 720 EUR and 26 030 EUR 30 % between 26 030 EUR and 69 783 EUR 40 % above 69 783 EUR
Non-residents normally pay tax at a base rate of 20% with any tax falling into the higher brackets payable in accordance with the superior bands. The rules on the avoidance of double taxation are governed by any double taxation treaty between the country of residence of the individual and France.
Copyright All Rights Reserved Victoria Headdon, Compass Immobilier
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