Interest in French real estate among compatriots has always been great and is not going to fall, however, it is very difficult to understand the ornate features associated with the purchase of local housing. Today we will consider the topic of taxes in France and their features.
In France, one-time payments are made both when buying real estate and when selling it. Buyers of housing in France will need to pay notary fees frais de notaire - a percentage of the cost, which depends on the year of construction and the department in which the object is located. Usually, the amount of payment is about 6.5% of the cost of housing, but the amount may vary depending on the availability of a loan, the number of pages in the deed, the method of purchase and the variety of notary operations. It is also important to know that notary costs for new buildings are 2.5%, which certainly pleases buyers of primary housing. This low percentage is also due to the fact that new construction is already subject to 20% VAT. And the payer can subsequently recover the VAT - be it a French legal entity or an individual who buys investment property as a leaseback. And one more pleasant moment for buyers of primary housing - new construction on the territory of the country is exempt from paying real estate tax for two years from the date of delivery of the construction. To do this, you just need to submit the appropriate declaration in time.
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Those who decide to part with their real estate in France will have to calculate the period during which the seller had to own it. If the sale takes place within 5 years, then the gains tax for non-EU citizens is 36.2%. All expenses related to the acquisition of real estate and its ownership will be deducted from the tax base: notary fees, agency fees, repair work, etc., provided that the home seller can document this. If an object is put up for sale after 6-22 years of ownership, then every year the gains tax is reduced by 1.65%. If the landlord has exceeded the bar in 22 years of owning this property, then he will be exempted from this tax, although this will only affect individuals and transparent civil structures.
Every year, the owner of French square meters will have to pay taxe foncire - a property ownership tax that comes in the fall. Its amount depends on the area of housing and location - the rate can differ tens of times, since its size is determined by voting in the mayor's office of each commune. According to the protocol, it is established by the tax authorities in accordance with the cadastre and is calculated from the average rental value for each specific region, but everything is not easy here, since politics actively interferes in matters. For example, a 5-room apartment in Courbevoie with an area of 95 square meters (La Defense district near Paris) will cost 800 euros per year for this tax, and for a similar apartment in Montrouge from the same department, the price will be twice as much. Most often, the trend can be calculated by the political orientation of the mayor's office - the more leftist it adheres to, the more taxes will be. But of course, everything needs to be checked in each individual case. Typically, a proportionate portion of this tax is returned to the seller in the year of sale.
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There is also a residence tax in France, taxe d'habitation, which is paid by the one who actually lives in the apartment or house - be it the owner or the tenant. This tax is a kind of payment for various general services provided by local authorities: garbage collection, sewerage, water supply, general infrastructure, security, etc. The tax is calculated on January 1 of the tax year, and its final amount depends on income and family composition (the tax unit in France is a family consisting of a husband, wife and their minor children, who, upon reaching the age of 18, are an independent unit). If the owner does not live there, it is rare and the house is empty, then, most likely, you will have to pay a tax on empty premises, taxe sur locaux vacants, which is in large cities, the Paris region and in the south of France.
The progressive luxury tax impt sur la fortune immobilire in France was recently drastically reduced by the new government immediately after the elections and is now charged only on properties over ˆ 1.3 million, with debts and encumbrances deducted from the asset. Therefore, it is sometimes interesting to take a loan even when the owner has money to buy; the accounting of assets is carried out as of January 1, so if the purchase of an expensive house occurs at the end of the year, then the buyer will be able to "pull" with the registration of the transaction until early January. From January 1, 2018, the rate of this tax is as follows: the cost of housing from 1.3 to 2.57 million euros will be taxed at a rate of 0.7%. Housing prices ranging from 2.57 to 5 million euros will be subject to a 1% tax. It will grow to 1.25% with property values ranging from 5 to 10 million euros. If the value of real estate exceeds 10 million euros, then such real estate will be taxed at a rate of 1.5%.
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It is also important to understand that tax is paid every year only if the value of the assets combined (and not just the net worth of the objects) is equal to or exceeds 1.3 million euros. For example, an object may cost 1.5 million euros, but of this amount, 1 million is in the loan. That is, it turns out that the amount of the asset is 500,000 euros, which is less than the "red" amount of 1.3 million euros, therefore it is not subject to wealth tax. In principle, the cost of this tax is not as onerous as its name suggests. Combined with low annual property taxes (taxe foncire and taxe d'habitation), the total annual tax on luxury properties is still significantly lower than similar taxes in other countries.
Under French law, all income from real estate must be declared. The owner of commercial real estate can safely use depreciation deductions, reducing the taxable result to zero. But even with a zero result, the declaration must be handed over so as not to run into problems.
The HomesOverseas.ru portal thanks for the help in preparing the article:
Irina Dupor, co-founder of Immoconcept
Olga Mikheeva, founder of Star Leman Immobilier
