Property investment in France
Find great investment property in France with Leapfrog Properties
The market since 2007
Following the arrival of the credit crunch at the end of 2007 and its subsequent turmoil it has forced everyone to take a fresh look at what really makes a good property investment in France and what doesn’t. Gone are the days when investors would clamour to buy an investment property in Bulgaria or Spain or somewhere in France for the matter - just because everyone else was doing it and they didn’t want to miss the boat.
Quite sensibly, investors are now considering their purchases much more carefully, looking at a wider range of options and comparing prices so that they are confident in the investment they are about to make. This means that developers and private sellers alike are having to price themselves very competitively or even sell with significant discounts in order to attract would be investors which actually makes this a perfect time to invest.
Tax advantages for reesidents and non-residents investing in new build French property
France is typically thought of as a high tax country and this is true when it comes to corporation tax and social charges and somewhat with income tax if you are a French resident. There are however significant tax incentives out there particularly when it comes to property that is rented out by a professional management company providing hotel services on site. There are no tax savings to be made when buying a typical property in an apartment building or a house in a village that you might rent out short or long term. The tax incentive is very specific but if the terms work for you then it means that you have two distinct tax advantages:
- VAT rebate of 20% on new build property by the local tax office
- offset of 90% of the property price against income tax over 30 years
When you combine these two tax incentives you will find that you will pay very little or even zero tax on your French property. Read our zero tax on French property article for details. The main criteria are that you cannot live in it for more than 6 months per year and that you make it available for a few weeks per year for rental income to prove that you are indeed renting it out. If you are an investor you should of course be able to rent it out for many more weeks than that but a minimal rental income is all that is required to qualify. This rental must be done through a professional management company and you must sign a rental management mandate which then obliges the company to provide hotel services onsite.
And more advantages too...
Regardless though of whether or not there are discounts available on properties, France is one of the safest places to invest in the world and here are some of the key benefits of investing in property in France:
- Safest place in the world to buy property due to the rigorous buying process and protective legal system
- Extremely low Euro interest rates with highly competitive mortgages offering up to 85% finance for overseas investors and French residents alike
- French leaseback investment property may have guaranteed yields up to 5% (which more than covers mortgage interest) and full VAT refund of 20%
- France is the number 1 tourist location in the world with over 85 million tourists in 20015 alone and demand consistently exceeds supply of tourist accommodation thus ensuring good and reliable rental yields
This is due to a number of key factors including excellent transport links and infrastructure, an unrivalled lifestyle envied by many of its neighbouring countries, a rich and diverse culture and history, a good climate and a varied landscape from the mountains to the seaside offering many different leisure activities. This leisure industry contributes to a GDP of $2.6 trillion in 2017.
- After 10 years of falling or stagnant property prices we are seeing prices rise again in most areas of France
- This contrasts strongly with other nations where we have seen price drops of 50% or more, notably in Spain and the fledgling Eastern European economies. This is in part due to the strength of the French economy but also largely due to the strict lending criteria of the French banks. This means that those who have taken out mortgages in France have been able to afford them as they continue to base their lending on the financial status of the buyer; buy-to-let mortgages and self-cert mortgages, both of which have caused many of the problems elsewhere with their loose lending criteria have been avoided by the French banks.
The result of which has been more robust property prices and the continuation of high finance of up to 85% and low interest rates while most other nations such as the UK have withdrawn many of the high finance mortgages and imposed high interest rate charges for all except the most wealthy buyers with large cash deposits at their disposal. The political and legal stability in France also gives investors the confidence for investment property in this country where the risk is low.
- A proven and existing exit strategy: Unlike any other tourist destination France does not rely on foreigners for investment in their property as 95% of property sales are to French residents who constantly purchase holiday or permanent accommodation. This means there is a proven resale market when the time comes to sell up and cash in on your investment
- An investment you can enjoy: with such fantastic weather, wine, food and culture you may choose to use your property a few weeks a year and really enjoy it whether it is in the Mountains, beach, town or countryside
- Double tax treaty between France and the UK so you will not pay tax twice on earnings
- All your costs including your mortgage can be set against your rental income so that a very minimal amount of tax is actually paid
So when you compare property investment in France to past performance of many pension schemes across the world, you will notice that it has performed better - whilst also having an intrinsic value that bricks and mortar possesses but which stocks and shares generally do not.
Have a look at our selection of investment property in France.
Email or call us on 00 44 (0) 203 59 77 030 with any questions.