About Propriete "Direct" France
The new President of France, Nicolas Sarkozy, has introduced revolutionary "tax breaks", (as promised!), with the aim of "moving" the French property market from being a nation of "tenants" to a nation of "home owners". The President's aim is to move residential home ownership in France from 25% to 50% in his first 5 year term of office. This compares with UK, Germany and other countries with home ownership of over 80%.
We have studied the new laws carefully with the help of our fiscalists, tax lawyers and notaires and have made comments & conclusions...
TAX RELIEF ON MORTGAGE INTEREST:
Tax relief on mortgages for singles to 3750€ and married 7500€ plus 500€ for each child for first five years - up to 20% of nett income. To be deducted from nett income.
* *Comment : this is ideal for the first time home owner - the market/property we specialise in for investors!
SUPPRESSION OF INHERITANCE TAX:
Their will be no inheritance tax between spouses, if one spouse/partner invested in only his/her name. Children allowance is increased from 50.000€ to 150.000€, (per child, per parent!), before any tax may be due. Therefore one child allowance is 300.000€ and 3 children is 900.000€! Gift tax : you now give children 30.000€, (instead of 3000€), per year in cash and deduct from tax; but now you can give a 300.000€ property as gift - every 6 years! There is no change in succession laws for children.
* *Comment : enormous benefit/incentive for middle and upper income families to own property - either in their name; or the child-children!!
Naturally it is excellent to give tax breaks and incentives, but people must be allowed to have more money to benefit - therefore the following laws are introduced..
WORK HOURS:
If you work longer than 35 hours per week; all hours over 35 are exempt from both tax and social charges for both employee and employer!!
TAX (ALL):
On your total worldwide income - income; investments; stocks; property; etc. etc. …You cannot pay more than 50%! Also "plus fortune" tax now allows you to deduct 30% of any property; but the 50% rule applies, effectively negating this tax.
* *Comment : effectively reduces top income tax by 20% and invalidates the "plus fortune" tax. Today a married couple with "gross" joint income of 40.000€, (approx. £30.000/$60.000), pay approx. 20% tax before deducting all their expenses. This normally reduces tax to approx. 14%. And even less with children. Then you deduct the mortgage interest on nett!
**Conclusion : No-one can say with 100% certainty that the above laws will cause a property boom; but we can speak from "history". When we look at UK; Germany; Sweden; Canada & Italy - when they brought in similar "mortgage interest" and "capital" tax incentives, their markets went thru an average of 5 very good "boom" years before settling down. In fact UK and Italy had to stop the "breaks"!