Notary fees (Frais de notaire)
When purchasing a property in France, certain fees will apply, collected on behalf of the French state by the notary (registration and change of ownership fees). In the case of a new build, these fees will amount to 2-2.5 %. Should the purchase involve a second hand property, one must reckon with fees amounting to 7 to 8 % of the purchase price, with a degressive scale for higher priced properties.
Property tax (La taxe foncière)
Is a local property tax that is paid annually by the person registered as the owner as of January 1st. The payment itself takes place between September and November. The tax varies from one municipality to another. The basis for the calculation is 50% of the assumed potential rental income and on indexes delivered by the municipality. Upon transfer of ownership of the property, the buyer pays a pro rata share of this tax.
Council tax (La taxe d’habitation)
Is a tax on secondary residences, imposed on whoever has the rightful use of a property on January 1st. The tax, payable in the last quarter of the year, is based on the potential rental income according to the tax office’s evaluation (using data linked to its size, standard etc.). For primary residencies, this tax has been removed.
Capital gains tax
In case of gains on the sale of property, one falls under tax rules linked to one’s fiscal country as well as those that apply in France, since both countries are in a position to demand capital gains tax on the sale of French property. In France, the applicable tax rate is maximum 34,5% when the vendor is fiscally resident to a country belonging to France, the European Union or the European Economic Area. After 30 years of ownership, one becomes entirely exempt from capital gains tax. Before the tax is applicable, one can normally benefit from considerable deductions that in practice reduces the tax burden considerably.
Wealth tax (IFI - "Impôt sur la Fortune Immobilière")
Tax on wealth in France only applies the moment one exceeds 1.300.000 euros in net assets (less outstanding debt). If one is a tax resident of another EU country, one avoids double taxation on assets, since amounts paid in France will be tax deductible in the other country. It is strongly advisable that potential buyers study in detail the tax treaty that exists between their home country and France to get information on how to avoid double taxation.
The surviving spouse is normally totally exempt from inheritance tax. Direct descendents get a one-off tax free allowance of 100.000 euros/parent per child. For any inheritance amount exceeding this, a tax scale will apply, in most cases this will amount to 20%.
It is of great importance to understand the rules in France concerning donations. It is possible to plan the transfer of sizable assets in France to one's family members without having to pay any tax, and thereby reduce potential inheritance tax implications. The use of renewable abatements (100.000 euros from each parent every fifteen years) is treated separately from the laws of other nations. This means that the application of the French rules does not interfere with the application of potential exemption rules one could benefit from in one’s home country and vice-versa.
Before signing your preliminary purchase and sales agreement (compromis de vente), one's mortgage lending-plan must be in place. AAA Riviera can introduce you to Scandinavian, French or International banks, proposing varied and attractive financing plans that will suit your criteria at competitive terms.
A property must be insured immediately upon change of ownership. AAA Riviera will introduce you to insurance companies and give you the necessary advice in order to subscribe to a well suited insurance policy.