Who does not dream of owning a lovely home in sunnier climates? You may be surprised to discover that buying your own home in France is both easy and affordable as long as you are armed with all the essential facts and information.
Under the following keywords you`ll find helpful information about "Residence Secondaires", acquiring Second Homes in France.
These information pages don`t provide any information about real estate investment possibilities. However, through our network of partners we will be happy to provide you with personal advice in case of individual interest.
The purchase of property in France is usually divided into two steps the initial contract and the final contract:
First of all an agreement is negotiated between buyer and seller and the initial contract which is called "Compromis de Vente" is then signed by both parties. This is a legal document, binding on both parties and should not be taken lightly. At this stage the buyer pays a deposit of a minimum of 10% of the purchase price which remains `blocked' in a special account at the Notaires office until such time as completion takes place or the purchase is aborted. At this stage the property is taken off the market The period between the two stages of the purchase lasts usually two months.
At the end of this period, which can be extended at the agreement of both parties, the final contract, the "Acte de Vente" is signed at the Notaire's office and the property passes to the buyer, who must pay the balance of the purchase price to the Notaire who then pays the vendor. It should be noted that the balance must be in the Notaire's possession before the contract is signed. It will also be necessary to provide to the Notaire before completion a copy of your birth certificate translated into French and, if applicable, a copy of a Marriage Certificate also in French.
From the signing of the Contract the purchaser is responsible for the insurance of all the buildings on the property.
The initial contract "Compromis de Vente" will describe the house or apartment that you are hoping to purchase. After signing this contract, the price of the property is fixed and cannot be altered. The deposit will then be taken from the bank account of the purchaser and either be transferred to a block account of the vendor or directly to the account of a certified lawyer, who must be certified by the French state. Deposits from a blocked account will be credited after the effective signature of the purchaser on the final contract.
If the buyer intends to take out a mortgage then it is necessary for this to be declared at the time of the agreement and a substantive clause in the "Compromis de Vente" protects the purchaser's interests in the event that a loan is not made available. In this event, the sale does not proceed and the deposit is returned. In the event of the discovery of a `planned nuisance' through the searches, the buyer can withdraw and the deposit is returned. Should, however, the buyer break the contract, the deposit is paid to the vendor as an indemnity - conversely, should the vendor break the contract, the deposit is returned to the purchaser.
The determined sum for the purchase must be transferred either in Euros or be converted into French francs. The transfer can be carried out through your bank, by telex, or by bank order. It would be helpful to open a French bank account and transfer the money to this account. Thus all payments for the purchase can be made by cheque.
In France, the "Notaire" is the only state-authorised entity who can deal with the purchase of real estates. The "Notaire" is responsible for the smooth handling of the purchase and represents both the interests of the vendor and the purchaser. If you feel that your French languages skills are inadequate, you should know that the "Notaire" will not always clarify every detail, and you should seek someone's assistance since purchase contracts often contain complicated clauses.
In France, you can generally receive mortgages from the bank for the purchase of properties. Usually mortgages must be redeemed within the time agreed. This rule should be strictly observed. Furthermore, it should be noted that banks in France only grant credit to natural persons, if they have additional life insurance.
Various fees come with the purchase of property. In addition to the purchase price, provided that you are the first owner of the property and the property is up to five years old, you`ll have to pay a fee of about 3% . Older property is charged with a fee of approx. 10% (for stamp-duties, local tax, and registration fees).
The "Notaire" charge amounts to approx. 2-2.5% of the purchase price. Finally you are obliged to pay an additional charge that comes to 1% of the mortgage when constituting the mortgage.
All property owners are obligated to pay the following taxes on a yearly basis:
1. Taxe d'habitation
2. Taxe fonciÃ¨re
This yearly tax has to be paid either by the owner or the tenants of a furnished house. The tax is calculated based on the rental value of the property, similar to the Taxe Foncière. There is, however, a reduction for families.
Every year on January 1, the property owner must pay the Taxe Foncière. This tax is calculated by taking 50% of the rental value and multiplying it by the local base rate.
For new building this tax is not applicable within the first two years. Due to regional distinctions in local law, the amount of tax payable will vary.
Impot de solidarité sur la fortune is the French name for this tax that private owners must pay if the net value of their property exceeds EUR 1 300 000. The tax amount depends on the value of the property.
In general there are three categories:
0-1.3 million € : no tax due
from 1.3 to 3 million €: 0,25% p.Y.
over 3 million €: 0,50% p.Y
We recommend that you make inquiries to the notary about the applicable wealth tax before purchasing your property.
If the property is your first fixed domicile, you are exempt from the property profit tax, provided that you have lived in France for five years before reselling the property. In most cases, however, foreign buyers purchase only holiday homes or second homes (Residences secondaires). In these cases the tax reaches its maximum amount during the first five years after the purchase of the property, 19% for other members of the EEC, 33% for all the others.
The progressive deductions,which depend on the length of the period of ownership, are 2%/year after 5 years, 4% after 17 years, 8% after 24 years and total exemption after 30 years.