France Real Estate- Introduction
France is host to more than 77 million tourists every year, and that means a fantastic rental market.

Real estate prices in France are comparable to prices of Dublin, Madrid, Rome and London. In the northern and central parts of France, great prices can be found on properties needing renovation. Many properties may be found with good structures, and others in need of basic things like sanitation systems.

France Real Estate- Restrictions on Foreign Ownership
Foreigners wishing to acquire property in France are as unrestricted as  French citizens.

France Real Estate- Ownership Options
In France it is possible to set up a company specifically for the purpose of purchasing property. The legal entity, Societe Civile Immobiliere (SCI) is transparent, non tradable and requires a minimum of two shareholders, and through the entity, obtaining financing will be easier. Loans are made to the company, and the individual shareholders are the guarantors.

With an SCI, the corporation will own the property. A legal entity that is not French, will own the French corporation. According to the instructions of one’s will, the shares of the non-French corporation will be passed to your heirs in the event of your demise, and the French corporation will maintain ownership of any property.

As can be expected though, the French way will not be as simple as reading these words. There may still be fees, even though the property owner technically remains the same. As with anything in life, it is best to seek advise from those who are experienced and know more about what it is you are trying to accomplish.

France Real Estate- Buying Property in France
In France, everything requires a document that is signed by an official, so anything you do in France will create a paper trail.

France Real Estate- Buying Property
1- Attorney
Hiring your own attorney and or independent notary who is able to speak French and English is a very good idea to have for representation while dealing with the necessary steps if the process of purchasing real estate. It is highly recommended.

A government notary is there to make sure the sale of property is completed according to French law. They are state officials and will not point out any potential problems and act on behalf of the buyer and seller.

An independent notary will not have an additional cost, and will share the paid fees with the government notary. The independent notary will have all the documents translated before you sign anything and guide you through the paperwork involved.

It is necessary to understand the inheritance laws of France. The laws regarding inheritance are complex, and guarantee children a share of the estate. There are no rights granting spouses automatic inheritance, and there are lawyers specializing in this who can advise you around this. The way the contract is structured affects who will inherit your property, and is not related to what your will says. Make sure you understand these matters before signing any documents.

2- Sign a Contract
An initial contract of sale, compromis de vente will then drafted by your real estate agent. Again, it is very good practice to have your lawyer and/ or independent notary look over the document before signing it. There is no standard type of contract even though compromis de vente is the most common, so make sure it is looked over by a professional.

Make sure you understand whatever document you are signing, and that it contains any conditions suspensives that are necessary. If conditions stated in a contract are met, the contract will be void and the prospective purchaser will be entitled to recover the deposit.

Other documents you may see are the promesse de vente and promesse d’achat, and these are options. These documents state the commitment to sell or buy, but the other party is not legally bound. The binding agreement that fixes the price and obligates both the vendor and purchaser to come to an eventual completion is the compromis de vente. With a promesse de vente and promesse d’achat if the purchaser backs out, he will not lose his deposit, but may be subject to a claim for damages. This is also applicable to the vendor; if the vendor withdraws, he may be liable for compensation up to an equivalent amount of the buyers deposit.

3- Pay the Deposit
Upon the signing of the compromis de vente, the purchaser will pay a deposit of usually 10% of the property price. The deposit is held in an escrow account via the votary or your real estate agent. If the deposit is paid in cash and the buyer pulls out of the deal, the 10% will not be returned.

When applying for financing, a maximum of 45 days is allotted to arrange a mortgage. In the event the bank refuses the loan, the contract is null and void, and your deposit will be returned. Then conditions are the same as a cash buy if the bank decides to loan you money.

4- Title Investigation
When the compromis signed, the notary will begin due diligence on the title. During this process, providing a copy of your birth certificate and if applicable marriage certificates to the notary is required.

5- Sign the Deed
The purchaser and vendor will go to the notary’s office once everything is determined to be in order. The final deed of sale, the acte de vente, will be read aloud in French by the notary, and both parties ass well as the notary will sign the deed.

If you have granted power of attorney, (par procuration) to your notary or real estate agent, they can sign on your behalf. You will then pay the balance, get the keys and you are now owner. The money for the remaining balance must be in place prior to the date of closing. You will receive a proof of ownership, about six to eight weeks later a copy of the deed. The copy of the deed will be sent to you once it has been recorded into the French administration system. The notary’s office will keep the original documents.

You are responsible for the insurance once the final document is signed. By law third-party liability insurance must be included. Local and land taxes are your responsibility, (taxes d’habitation and taxes foncieres). The person occupying the property on January 1 will pay the taxes d’habitation. The person who owns the property on the same date will pay the taxes foncieres. Exempt from taxes foncieres , are owners of new property.

France Real Estate- Additional Costs

All legal costs and fees associated with the transfer of property in France are the buyer’s sole responsibility. The costs will vary according to the purchase of a new home or older property. For an existing property, expect to pay between 8% and 10%, and for new house or apartment, around 4%.

Real estate agents in France are able to set their own commissions and usually range form 5% to 10%. Either the purchaser or vendor may pay these commissions. Real estate agents sometimes include their fees into the sale price of the home, so make sure this is clarified before inspecting properties. Before signing any preliminary contract, it is best to know if you are liable for the real estate agents commission fee.

France Real Estate- Taxes
Transfer Tax: For existing properties sold, there is a transfer tax of 7.5%, For new properties it is around 1%.

Government Tax:  There is a tax imposed for registering a mortgage or loan and the fee depends on the amount of the loan.

Property Tax: A few annual property taxes exist-
- taxe d’habitation is paid by owners/ occupiers and most long-tern rental tenants, and will be around $240 for a studio or one-bedroom apartment in most cities. The formula used for calculating the tax is complex and will vary depending on whether the property is a primary or secondary residence. A higher tax rate is enforced on secondary residences.
- taxe foncier is a real estate tax and is based on the value of the apartment. The age of the building, area of the city, and size of property are taken into account.

Similar to the States, there will be home-owners fees, or copropriete. The fee will go towards maintenance of the building, common utilities, garbage collection, and other related necessities.

Inheritance Tax: In France, beneficiaries pay inheritance tax. Applicable to this tax rate is the net value of the asset, after the deduction of liabilities, and any tax-free thresholds depend on the relationship between the deceased and beneficiary. Inheritance taxes are avoidable if you seek the proper council.

Wealth Tax: For individuals whose wealth exceeds 720,000 euro (US $864,000), a wealth tax, impot de solidarite sure la fortune is enforced. To calculate this tax, all assets held in an individual’s name are combined. The wealth tax is owed on any amount that your assets exceed the exemption.

Wealth is assessed on only French assets for non-residents. For assets above 15 million euro, the rate is progressive from 0.5% to 1%. Remember that wealth and inheritance taxes are avoidable by owning French property via an SCI. With an SCI, your assets are the shares of the corporation. The value of the shares is calculated by taking corporate assets less the liabilities. So, if you have an SCI and have a mortgage on the property, your asset base is reduced by the amount of the loan. This does not apply if the property is held in your name.

Rental Income Tax: Regardless of where you reside, as an owner of property in France earning rental income, you are liable to pay taxes. For residents of France, this is imposed at regular income tax rates. Non-residents will pay a minimum of 25%.

Capital Gains Tax: There is capital gains tax of 33% if you sell your property within the first two years of ownership. After the second year of ownership, a discount of 5% is allowed per year. After 22 years, any gain is not taxed.