Buying a property in France
FK Properties will help you and guide you in a property transaction in France. We will help you find your property, will prepare the deed and give you all necessary advices and security needed (legal structures, taxes, mortgage…).
What you have to know about property transaction in France:
From research to ownership:
FK properties will first try to find out your needs: apartment, villa, size, location, budget… We will offer you afterwards a panel of properties available on the market. FK properties will make sure the properties are healthy and safe (surveys *) and garanty you the legal structure of these through serious enquiries!
Once FK properties has found your dream home and reached an agreement on its price, you will be entering into a provisional contract ("compromis de vente " or "promesse d'achat") with the seller. The provisional contract stipulates, among other things, the details and state of the property, existing encumbrances, price and terms of payment, the amount of the security deposit, the date for taking possession and any conditions precedent you wish (building permit, mortgage...). The security deposit usually amounts to 10 % of the acquisition price and is payable after a "cooling period" of seven business days, giving you the opportunity to retract. The deposit is held by the notaire or the real estate agent and is refundable in case the conditions precedent mentioned in the provisional contract are not met.
Within the next 2 to 4 month, FK Properties and the “notaires” designed for the transaction will be preparing the files necessary to the final “deed”, the final purchase agreement which must be prepared by a notaire and signed in his presence by all parties concerned. At that final step, the whole payment should be transferred to the notaire who will be in charge of paying the seller.
Fees and transfer taxes are payable by the buyer to the notaire on completion of purchase and usually average 7% for second hand properties and 3 to 4% for new properties, excluding mortgage fees if applicable. Notaires are gouvernment officials, they guarantee the buyer good title on the property and will ensure that any conditions set in the purchase agreement are fulfilled.
Surveys necessary to garanty the property is healthy ( provided by FK properties to buyers):
Asbestos investigation: (recherche d’Amiante)
An expertise relates you weather the property being used for habitation contains or does not contain asbestos and if it could be dangerous for health.
Lead poisoning investigation: ( recherche de plomb)
An expertise relates if there is any risk nor history of lead poisoning in the building.
Termites: ( Etat parasitaire)
A technical surveyor will check there are no termites.
Taxes and other property costs
Taxes:
Property owners in France, pay the following taxes annually:
- a "taxe foncière", payable by the owner, based on the average rental value of the property. Information given by FK properties.
- a "taxe d'habitation", payable by the person residing on the property on the 1st January of each year. Information given by FK properties.
- an annual wealth tax (ISF) may also have to be paid by the owner. This tax is based on the value of your French assets and is computed according to the following table:
ISF (Impôt de Solidarité sur la Fortune)
|
Tranches for 2007 |
Rate |
|
Up to € 760.000 |
0% |
|
From € 760.001 to 1.220.000 |
0,55% |
|
From € 1.220.001 to 2.420.000 |
0,75% |
|
From € 2.420.001 to 3.800.000 |
1,00% |
|
From € 3.800.001 to 7.270.000 |
1,30% |
|
From € 7.270.001 to 15.810.000 |
1,65% |
|
Above € 15.810.000 |
1,80% |
Buyers should inquire about such taxes from the seller prior to any acquisition
Capital Gain tax:
When selling property, a capital gain tax may have to be paid by the seller.
The rate of Capital Gains Tax (CGT) for both French and non-French residents who are residents of an EU country is 16% of the net gain. (If you are a resident of France, you will pay an extra 10% in French National Insurance, making the effective rate of 26%). The capital gain is computed after taking into consideration all costs related to the original acquisition and any major improvements undertaken (keep your invoices). It is reduced by 10% per year of ownership of the property after five years of ownership. Therefore, there is no capital gain tax after 15 years.
For permanent residents in the property being sold, there is no capital gain tax.
The notaire is responsible for the calculation of the capital gain tax and will pay it directly out of the sale proceeds.
(Note that non-residents must hire a tax representative independandly of the notaire when concluding a sale).
Insurance :
Under French Law, you must insure your property as soon as you purchase it; this can be arranged with the notaire or through your usual agent or bank.
