The
French government has a very simple way of dealing with the property
related predictions of the French statistics office(INSEE).
INSEE predicts a growing
demand for and shortage of housing units for long term rentals,
student accommodation, 'medicalised' retirement homes, retirement
homes and short term accommodation for tourists and business travellers.
So what does the French
government do? It gives huge and hearty tax incentives and breaks
to those who would invest in supplying this demand. 'Leasebacks'
are the ones you've probably read about, because these work for
foreigners as well - Brits, Americans etc -, they are usually tourist
accommodation units in Paris, Languedoc, Provence, Dordogne or the
ski areas.
But these types of developments,
sold on the LMNP (Location Meublé Non Professionel - Non
Professional Furnished Rental) basis are just the tip of the tax
effective property investment French mountain.
Remember anyone officialy
resident in France must pay tax in France. You can pay some of your
tax in the UK if you want to, but if you are resident in France,
you must make a declaration in France and pay your taxes in France
as well. This means that if the tax you have paid in the UK is lower
than you would have had to pay in France, you still have to pay
the difference to the French government. Hence if you can minimise
your tax in France, why not just declare and pay in France?
Here's a list of some
of the different forms of tax effective property investment.
De Robien
Up to 45,000 € of tax savings spread over 15 years,for a purchase
of 160,300 €, you would save 5,762.50 € the first 5 years
and 1,759 € pa for the following 10 years. assuming that you
have a TMI of 48.09 %.
Often have 9 years garanteed
rental returns.
Good rates of rents
No maximum income qualifications for tenants.
Possibility of renting to your children or grandparents.
Simple resale after 16 years, no capital gains, empty property.
Brought in to deal with the lack of long term unfurnished rental
stock. This gives huge tax incentives if you purchase something
intended for long term rentals. The maximum rental levels are fixed
depending on the geographic zone that the property is in. If you
have children this has recently become more interesting because
your tenants for part of the minimum 9 year period can be members
of your family. On some schemes 100+% interest only loans are available
for french residents. Visit The French Property Company's site they
have a De Robien development on their listings and on enquiry can
fully explain how this type of property investment works.
Malraux -
All works of renovation are deductible from net taxable income.
All expenses, taxe fonciere,loan interests can be set against rental
incomes.
Automatic allownce of 14% on the rentals.
Owe a lot of tax? This is for you. This works on renovating old
historic buildings, Chateaux etc. again for details contact The
French Property Company's site
ZRR, LOI DEMESSINE, Residence de Tourisme
All fall into the group of products that have been deemed 'leasebacks'.
With all of these there is the possibility of getting the TVA, 19.6¨%
charged on all new build, back from the state, often garanteed rental
returns often mixed with varying amounts of owner occupation.
Student accommodation,
medicalised accommodation etc. is included in this bracket. These
can generally be bought on a LMP (Location Meublé Professionel
Professional Furnished Rentals) or a LMNP (Non Professionel Professional
Furnished Rentals). For non french tax payers the LMNP basis is
best, for French tax payers there are bigger advantages in buying
on an LMP basis. The French Property Company has a wide range of
these products on offer ranging from luxury ski chalets down to
Provencal beach huts, check them out here The
French Property Company's site.
By Rob Thorne of The
French Property Company
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