INVESTING IN FRANCE Roche & Cie - PROPERTY TAXATION 2018 - Cabinet Roche & Cie
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Roche & Cie
Chartered Accountants Since 1948
Specialists in Property for Non-Residents
INVESTING IN FRANCE
PROPERTY TAXATION 2018
www.cabinet-roche.com www.cabinet-roche.com
Roche & Cie
Specialists in property for non-residents,
Roche & Cie will assist you
in the purchase/resale and annual fiscal monitoring
of your second home in France.
• Preliminary study for a purchase or rental of a property
• Legal framework
• Accounting and preparation of tax declarations
Please do not hesitate to contact us
for further information.
Roche & Cie
40 rue du Pdt Édouard Herriot
BP 1222
69202 Lyon Cedex 01
+33 (0) 4 78 27 43 06
+33 (0) 4 78 27 00 95
rochecie@cabinet-roche.com
Roche & Cie
Property
in France
Taxation France is one of the finest destinations for
tourism and property investment for non-
and Practical residents. However, taxation, administrative
and legal constraints are all areas of concern
Advice
for foreign investors.
At Roche & Cie, our philosophy is to assist
you at every stage of your project, in order
that your investment in France combines
legal security, optimisation and pleasure.
Sandy Dalmas
Associate
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Purchasing a property
in France
SIGNING
THE EXCHANGE
OF CONTRACTS
Payment
of 5 to 10%
of the purchase
price.
OFFER TO
PURCHASE
10 DAY SECURING OF + /- 2 MONTHS
CANCELLATION A MORTGAGE, > NOTARISED
PERIOD IF REQUIRED SIGNATURE OF THE
The purchaser has the right
DEED OF SALE
to annul the purchase without In the presence
paying any compensation. of a notary.
Payment of the
purchase price
and handing
over of keys.
Roche & Cie
Only the purchaser is liable
for the notary fees. Example
The purchaser also pays for
the registration costs. Purchase of an
Total costs represent existing property
approximately 7% with a value of
of the purchase price. €2,000,000
Notary fees of
approximately
€18,000
Taxes of
approximately €122,000
Breakdown of costs
6.1%
0.9% Registration costs and
miscellaneous fees
Notary
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Local taxes
In France, there are essentially two local taxes
called ‘taxe d’habitation’ (residence tax) and ‘taxe
foncière’ (property tax).
Good to know:
You receive your tax notification directly
by post.
You also have the possibility to pay and
receive this information on-line:
www.impots.gouv.fr
Property Residence
tax tax
This tax is due each year by the owners This tax applies to all housing (principal
of a built or unbuilt property (dwellings, and secondary residences) and all occu-
industrial and commercial premises, pants (owners or tenants).
land etc.).
This tax is calculated directly by the tax
The property tax is calculated by the authorities in relation to the location of
tax authorities in relation to the notional the occupant on 1st January of the tax
‘cadastral’ rental value of the property year. The amount due is calculated by
and the rate determined by the local multiplying the net rental value of the
authorities. real property by the tax rate determined
by the regional authorities.
Payment deadline:
MID-OCTOBER Payment deadline:
MID-NOVEMBER
Roche & Cie
Taxation
of rental income
(seasonal rentals)
FLAT-RATE PLAN ACTUAL PLAN
Rent > €70,000/year
CRITERIA Rent < €70,000/year
Or optional
Deduction of actual costs and
Application of a 50%* lump-sum expenses: water, electricity,
DETERMINATION allowance on charges. insurance, service/management
OF TAXABLE * The leasing of classified holiday
charges, maintenance and repair
BENEFITS furnished properties benefit from lump-sum costs, interest on borrowing,
allowance of 71% (if rentals
I.F. I*: Real Estate Wealth Tax
(*Impôt sur la Fortune Immobilière)
Who is liable for this
tax ?
You are liable for the IFI when the net value
of your real estate wealth is greater than 1.3
million euros.
Taxable assets
« ln fine « loans (single amor-
All built and unbuilt properties (building land,
tization at the end of the loan)
agricultural land, ... ), real estate assets, shares They become partially deductible.
of real estate companies. The debt is reduced by a prorated
Principal/main residence: (If the tax residence is amount taking into account the
number of years spent on the total
in France), 30% allowance. number of years of the loan (thus
creating a gradual depreciation
Deductible liabilities
and therefore a reduction of the
deductible debt).
Debts contracted in the family
Since the last Finance Act, only certain debts circle
These debts are not deductible
are deductible. (unless they are contracted from
ascendants/descendants, brother/
GENERAL RULE: are deductible the debts sister and only IF the persan liable
existing on January 1 of the taxation year justifies the normal nature of the
and which are related to the acquisition loan conditions)
of the property, the expenses of repairs, Limitation beyond 5 million euros
maintenance, construction, reconstruction or of assets
enlargement. When the total value of the taxable
assets exceeds 5 million euros, and
TAX DEBTS: only those related to the the amounts of debt admitted for
deduction exceeds 60% of this value,
taxable properties the portion exceeding the 60% is
only deductible for half its value.
LOANS AND BANK DEBTS
Roche & Cie
Rate (effective on 1st January 2018)
FRACTION OF THE NET TAXABLE VALUE OF WEALTH APPLICABLE RATE
Up to €800,000 0%
From €800,000 to €1.3 million (inclusive) 0.5%
From €1.3 million to €2.57 million (inclusive) 0.7%
From €2.57 million to €5 million (inclusive) 1.0%
Between €5 million and €10 million (inclusive) 1.25%
Above €10 million 1.5%
Facts relevant
to non-residents
Non-residents are only taxed on their real estate
located in France.
In addition, foreign citizens settling in France benefit
from an exemption on their property abroad up to the
end of the 5th year following their move to France.
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Capital Gains on Property
Capital gains tax on property is determined as follows:
PRICE OF SALE – PURCHASE PRICE* = NET CAPITAL GAIN
The net capital gain is determined after the deduction of allowances for the holding
period, in accordance with the table below.
Rate of allowances applicable in each year of ownership
PERIOD HELD
Income tax base Base for social security
+ additional tax contributions
Less than 6 years 0% 0%
From 6th to 21st year 6% 1.65%
End of 22nd year 4% 1.6%
Beyond 22nd year Exempt 9%
Beyond 30th year Exempt Exempt
The tax rates are as follows: 19% for income tax
+ additional surcharge of 2 to 6% + social security contributions of 17.2%
* The purchase price may be increased
by the following amounts:
• Purchase costs (actual amount or a
flat-rate of 7.5% of the purchase price).
• Actual amount spent on construction,
reconstruction or expansion; or if the
property has been owned for more than
5 years, there is a possible option for a
flat-rate of 15% of the purchase price.
Roche & CieInheritance in France
Transferring your assets Inheritance taxation
Are you subject to French civil law? The transfer of your estate is subject to
(law of inheritance) French tax if:
Applicable law = Civil law of the • Your last place of residence was in
deceased’s last residence France.
EXCEPT IF: He/she has provided in • Your assets are located in France.
a will that the applicable law should be
• Your heirs/beneficiaries have resided
that of the country of his/her nationality.
in France for at least 6 years during the
French law provides that it is not
10 years preceding the transfer in the
possible to disinherit one’s children
absence of a taxation treaty.
(principle of the ‘réserve héréditaire’/
family inheritance allocation).
SPOUSE
EXEMPTED
CHILDREN
€100,000 allowance per
child, every 15 years
Rate (differs according to relationship)
GIFT TAX FOR DIRECT INHERITANCE
TAXABLE AMOUNT AFTER ALLOWANCES TAX RATE
Less that €8,072 5%
Between €8,072 and €12,109 10%
Between €12,109 and €15,932 15%
Between €15,932 and €552,324 20%
Between €552,324 and €902,838 30%
Between €902,838 and €1,805,677 40%
Above €1,805,677 45%
www.cabinet-roche.comPractical advice
Health and Sickness Insurance
Resident of a country in the European Union
and Switzerland:
You will be insured in the same way that you are in your
country of origin. This will in turn qualify you for a European
health insurance card.
Any non-European Union citizen:
You are legally obliged to take out private insurance to cover
your medical and hospital expenses.
Visas
Do I need a visa to go to France?
I am a citizen of the European Union, from the European
Economic Area, from Switzerland or Monaco: No
I am a citizen of another country:
Short stays (-90 days): Mandatory visa*
Long stays (+90 days): Mandatory visa
*except for certain countries (Australia, Canada, United
States, Japan etc.)
To obtain a visa for France, you must contact the visa
office of the French embassy or consulate in your
country of origin.
Driving License
License from the European Union: Valid
License outside the European Union:
Valid only for short stays (You can also read
