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How much is French
capital gains tax when you sell a French house?
Capital gains is the difference between the price the french
house sells and the price the french house
was bought at. In France there is a difference in treatment
between capital gains within a 2 year span and after 2 years.
Exemptions:
All property transactions are in theory subject to capital
gains tax. However, exemptions have been put together to protect
the owners.
Home of residence:
All capital gains based on a property which is your primary
residence (or has been for over 5 years) will generally have
total exemption on all tax. The 5 year time condition is cancelled
in the case of a divorce, change in the status of your family
and/or a move to get closer to your work place. This last
situation can be handy on the case of a quick turnaround project.
Other tax exemptions do take place (such as a 5% deduction/year),
however capital gains tax is generally evaluated to 26%. which
includes: 16% + the general social security contribution [CSG]
of 7.5% + the contribution to repayment of the social security
debt [CRDS] of 0.5% + social security contribution of 2%)
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What does "..." mean in
English?
Agent Immobilier: Estate agent
Acompte: Deposit
Acte authentique de vente: Deed of sale
Apport personnel: deposit/ down payment
Assurance décès: Life insurance
Compromis/Promesse de vente: Preliminary
sales agreement
Condition suspensive: Condition precedent/
let out clause
Expertise: Valuation appraisal
Frais de dossier: Mortgage arrangement fee
Frais de notaire: Solicitor’s fees
and costs
Hypothèque: Legal charge on property
(mortgage)
Multirisques habitation (MRH): Buildings
and Contents insurance
Notaire: French Solicitor
Période d’anticipation: Pre-repayment
period
Période d’amortissement: Repayment
period
Prêt immobilier/Crédit immobilier:
French mortgage
Vente en l’Etat Futur d’Achèvement
(VEFA): Purchase of a property not yet completed
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Do I need insurance for a French
mortgage for my French house purchase?
Life insurance (assurance décès, invalidité)
French lenders will oblige you to take on a life insurance
that will guarantee your monthly payments in case of death
or short and long term disability. This isn’t reinforced
by the law but refusing such an insurance basically will mean
not being able to get a French
mortgage.
Generally, banks will offer you different insurance plans.
These can be good or bad partnerships, and the only thing
to do is compare.
Job loss insurance (assurance perte d’emploi)
This insurance can be set aside if you have a large down payment
or if you offer legal charge on your French house.
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question to the FocusFrance Team
What is the “Loi carrez”?
The contract “compromis de vente” is always to
the advantage of the vendor. This basically means that if
you find something wrong with the property a couple of month
after the sale, you have no right to attack the vendor for
hidden problems.
In order to protect the buyer, the French government has
put together a series of rules and tests that will help you
buy your French house in a more reassuring
state.
“Loi carrez” the Carrez law:
This law is important for the purchase of French apartments
or studio-flats. When you sign a “compromis de vente”
there must be details about the exact size of the property.
The surface of the property excludes anything with a lower
head space than 1,80m and all rooms smaller than 8 sqm.
2 consequences:
-If size isn’t mentioned on the contact, the buyer can
quite simply ask for the cancellation of the sale.
-If there is a difference of more than 5% between the mentioned
size and the real size, the buyer will be able to ask a reduction
on the price. This rule can save you or cost you thousands
of euros depending on how your treat it.
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question to the FocusFrance Team
How can I transport my belongings
to France?
Buying a French house means finding a property, financing
the property, but also furnishing the property. And this furnishing
often comes from the UK. How can you transport your personal
belongings from the UK to France?
By air, by land, by sea, there a quite a few options and
quite a few companies that actually deal with these kinds
of requirements. We believe the best thing to do is consult
a shipping broker.
You’ll find a list of Shipping/Removal brokers below:
FindShipping.co.uk
If you are renovating a French house it
could also be an opportunity to purchase your kitchen and/or
bathroom in the UK (cheaper in the UK “for once”)
and have the products exported to your new French home.
Click here to contact a Shipping broker
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question to the FocusFrance Team
French property:
Do I have to pay tax?
Whether you are the owner of a French house
or simply renting a property for a long duration, you will
be obliged to pay different French taxes.
“Taxe foncière”
The taxed is owed by the owner of the French house
on the 1st of January. However, and on the contrary to the
“taxe d’habitation”, if there is a sale
during the year, the tax is divided between parties on a month/12
basis.
“Taxe d’habitation”
This taxed is owed by the occupier on the 1st of January.
This is the case whatever your status, owners, tenants etc..
In the case of a sale during the year, only the person living
in the property on the 1st of January will liable to pay the
tax. The owner is responsible for all the modifications in
tenancy agreements.
« Taxe d’enlèvement des ordures ménagères
».
This can be compared to council tax. It basically means paying
to have your garbage picked up.
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question to the FocusFrance Team
What is a « compromis de vente»?
“Preliminary sales agreement” or “Compromis
de vente”
Its target is to finalize a negotiation. Traditionally, the
transaction between the buyer and the seller leads to a negotiation
on the price; once agreed, they next step is the writing and
signature of the “compromise de vente”
At this level, the “compromise de vente” is signed
by both parties but the buyer still has 7 days to decide whether
he would like to continue the transaction. He can decide to
stop without giving any explanation at all.
You can sign a “compromis de vente” through a
French solicitor (Notaire) or simply between private individuals.
But be careful there are slight differences. Without the notaire,
you will have to contact the vendor in order to give up on
the property purchase. With the notaire you have to contact
the vendor in order to confirm your property purchase. A slight
difference that could become very important on a very well
valued property.
Content included in a « compromis de vente »:
- Présentation of the 2 parties
- Property address and a brief description
- The price and payment procedure
- Payment made at the signing of the contract
- Exact date of the final purchase
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Foreign currency transfers to France:
High street bank or Currency broker?
Depending on how you purchase your French house
(UK or French mortgage), you may need to exchange large amounts
of Sterling pounds to Euros and then transfer the funds to
a French bank account.
Purchasing foreign
currency can be a complicated process. There is the interbank
rate (rate at which banks buy currency from each other), commission
(charge taken by banks to organise the currency transfer)
and the actual rate at which you will purchase the euros.
Banks and currency
brokers make their profit in the margin between the interbank
rate and the rate you purchase the currency - And this is
where there is a massive difference between banks and brokers.
A highstreet bank will offer a rate with around 5% off interbank.
Example:
Interbank: 1 GBP = 1.50€
In practice: 1GBP = 1.425€
Currency brokers tend to work on a 1% scenario, saving
you on average 4% i.e £8000 on a £200k property
purchase.
We always tend to recommend Foreign
currency brokers for international transactions, however
there are quite a few out there and you must be careful with
who you choose.
Click here to compare currency brokers
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question to the FocusFrance Team
Buying from a French estate agent
or through a French private sale...Which is best?
In the situation of a French house purchase without intermediaries,
the buyer will eliminate all agency commissions saving up
to 10% on their property purchase. This can be a great way
of purchasing French house however it will also mean quite
a bit of negotiating in a language that isn’t always
easy to understand, especially in rural locations. It’s
an “in the know” game as private individuals may
overestimate the value of their property. There are some great
opportunities out there but do be careful. Over 50% of properties
are bought with private sales in France.
French estate agents are subject to a high level of French
rules and licences. You will have to pay commission between
4-10% of the French house value but in exchange
you will receive “advice”, and access to a higher
number of properties for sale. There are quite a few freelance
estate agents out there and it’s always best to request
English translations of all the mandates and documents you
will need to sign. Getting external and independent legal
assistance is another way of protecting yourself.
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question to the FocusFrance Team
Can I buy a French property with
a French mortgage?
Of course. Buying your French house with
a French
mortgage is even recommended as you will have access to
very low loan rates compared to the UK. Euro-mortgages are
based on the ECB interest rate which is currently around 2%
compared to the recent but still strong 4.5% in the UK.
The process is fairly simple. You can either contact a French
bank directly (this can be complicated with the language barrier)
or you can contact an English speaking French
mortgage broker.
The mortgage broker will have the advantage to actually compare
banks for you to provide the best possible interest rates
+ insurance possibilities.
You’ll find a list a mortgage brokers below:
http://www.French-Property-Mortgage.com
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