French Property Investment Guide & Timeline

Requirements to acquire all new build/"off-plan" under French Property Acquisition Law :

  • For Residential/vacation/retirement : You must visit the property/development site first with a French licensed real estate professional expert.
  • For Investment (income producing/buy-to-let) : Either above, or attend meeting or seminar with a French licensed real estate expert. However, you do not have to visit the property(s) if ONLY for investment purposes.

Following is a helpful guide to give you a general idea of the timeframe for the process of purchasing investment property in France :

  • Reservation documents will be emailed to you 3 days after choosing property(s).
  • After receipt and 3 days to read; you then have 7 days to sign and *return documents to head office and transfer the 5% reservation deposit to notaire. Either fax or scan tracking & bank receipt to this office. If the tracking and bank receipt is not received on time - reservation is automatically cancelled.
  • Approx. 3 weeks after receipt, the head office/notaire signs contract and returns to you by registered mail and gives you another 7 days to cancel. If you cancel the deposit is immediately refunded by notaire to your account.
  • You have 15 days to apply for mortgage from day you send deposit. You must have loan completed within 90 days.
  • If you are refused French finance, (during the 90 days), your deposit is refunded.
  • IMPORTANT! After 5 months, if "deeds" are not signed, the developer has the right to increase the price of the property(s) to current market value, or to cancel the contract and retain the deposit!

NOTE : Send all documents requested by courier, ie DHL, UPS, or FEDEX

RESERVATION (earnest money deposit) = 5%

CASH PURCHASE : After 3 months (or to where building completed - whichever is higher); another 25% plus "closing costs" for notaire/tax fixed on new build at 2.5%, (allow 10/15% plus agent's fees of 7% on old build). Then stage payments of approx. 10% to 15% every 2 to 3 months until completion.

FINANCED PURCHASE : 80% mortgages - totally "non recourse" - are available. Interest Only available. (90% mortgages are also available, but at present only on full amortisization).

If you take mortgage, you invest the reservation 5%; then the 15% plus "closing costs". Note : During construction the banks give you a choice that either you pay a small part of the interest they have paid out, (approx. 50 euros per month for each 100.000 euros borrowed) or pay nothing until completion. However, in this method, repayments will be slightly higher for "using" banks funds. (Mortgage insurance is compulsory if taking higher than 50% mortgage).

IMPORTANT NOTE : ONLY place initial investment direct to a French state notaire, or direct into the State Treasury Bank controlled by a notaire - never to any individual, company or entity! (French licensed real estate experts only use this method)

ABOUT CLOSING COSTS :

  • On new build and property up to 5 years old : 2.5% fixed.
  • On property over 5 years old closing costs are between 10% & 15%.
  • When selling, ALL costs are for the purchaser - none for the seller. The seller appoints realtor; notaire etc., but BUYER PAYS ALL CLOSING COSTS.
  • Recommend/assist with kitchens; furnishings etc. - if needed.

ABOUT TAXATION :

France has double-taxation treaties with every country - and therefore you will not pay tax twice!

Tax on rental income is very low - if not zero - in most cases. And capital gains tax in France is on a sliding scale that after approx. 11 years, (including deductions), there is zero taxation

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!!

We are more than willing to pass on our knowledge and experience; however we are neither tax advisers or accountants and strongly advise you to take personal advise from an international tax professional before investing. The notaire can also advise and is part of his profession