Before the Covid outbreak France's property market was healthy with many parts of the country experiencing consistent demand and some popular regions experiencing a 6-7% increase in house prices.
For Brits, buying a holiday homes in France has always been popular given its close proximity, charm, fine food and weather.
There are obviously pros and cons to owning a holiday home but for some the maintenance costs and up keep can be expensive and trying at times, especially when most of the year it may well remain vacant. A time can come when you decide to sell your holiday home and here are a few things to be aware of.
When selling your property in France you will need to find a Notary. Only these professionals are able to execute the transfer of property from one party to another. The good news for the seller is that the purchaser is responsible for the notary's fees and usually one notaire will act for both the seller and the buyer.
However, the seller will have to incur the cost of specific reports that are required when selling the dwelling. These surveys, named the Dossier de Diagnostic Technique (DDT) include but are not limited to:
Termites - if the property is in an area affected which includes most of the warmer parts France.
Asbestos - if the property was built before 1 July 1997
Lead - if the property was built before 1 January 1949
Gas and electricity - if the installations in the property are older than 15 years
Major natural and man-made risks such as flooding, avalanches, land movement etc if there is a plan to prevent such risks in the area.
Sewage disposal arrangements report - if the property is not on mains drainage.
In terms of fees, Notary charges can be anywhere up to 10% of the selling price and are payable on completion. The good news is since they are nationally appointed, the fees are fixed so you won't actually need to shop around to compare.
You will need to choose an agent when selling your home in France. Estate agencies fees are known to be fairly high and commission can be anything from 4% to 12%. The agency fees will also depend on whether you get a single agent to sell your home or multiple agents to assist in a quick sale.
Should you wish to avoid these hefty agency fees altogether you could also opt to sell your home privately online.
3Whether you are a French resident or have a holiday home there, when it comes to selling your property you will have two sets of tax to pay: capital gains tax and social charges. The standard rate of French capital gains tax for real estate is 19%.
If your holiday home has actually become your main residence, i.e your retirement home and you decide to sell it, you may not have to pay any tax on the gain. Put simply, you should be resident in the property at the time of sale.
Calculating the capital gains tax is relatively straight forward. The taxable gain is the difference between the purchase price and the sale price and for non residents is currently at 19%. Allowances are made for the costs incurred at the time of purchase such as notaire's and agent's fees. You can also offset the costs associated with the sale such as the cost of the survey reports mentioned above. There is a general allowance of €1000 for each seller so €2000 is allowed for joint owners, even if they are married.
Remember, if you are deducting any building work that has taken place to improve your holiday home, then those invoice amounts can only be offset if the builders that have carried out the work are VAT registered.
Prelevements sociaux (social charges) are applicable to everyone selling a property in France. French residents had always paid this tax but now those with second homes in France are liable too. That's an additional 15.5% to budget for.
The Notary will in fact calculate all the tax due and they will inform you of the total required. They will also withhold the amount in a segregated client account at the time of sale and then pay the tax for you.
However, due to Brexit there is a slight change for non EU nationals. Instead of a Notary you will need to use a tax representative accredited by the French Tax Authority to do the above.
If you are selling your property in France, wealth tax may also be applicable. You may be liable if your property is more than €1,300,000.
When you are considering moving from one country to another it is always advisable to observe potential tax liabilities in both jurisdictions to establish when it is most tax-effective to sell and buy property. Timing of a sale can be a factor, so remember to seek specialist tax planning advice to establish what your tax liabilities are and the tax saving opportunities available.
There are two key documents to complete the sale. A purchase contract (compromis de vente) and the conveyance deed (acte de vente). These documents will be written up by the Notary and in them you will be making various statements and declarations. You should not make any untrue statements or declarations and therefore it is important to fully understand the contents of the documents you are signing.
You may wish to add an additional clause to state that the purchaser takes the property as he finds it with no recourse against you for any reason. Having such a clause inserted will give you peace of mind but you should be aware that the clause cannot protect you from any defects which you have deliberately hidden from the purchaser.
As a result of Brexit, the UK remains in a transition period, if you're going to be moving your property sale proceeds back to the UK, then it is a good idea to get the timing right to benefit from the best exchange rate available. Foreign exchange companies that offer a degree of transparency are the ones to go for if and when you decide to make an international payment abroad.
The Currency Club provides access to the live interbank exchange rate on every foreign exchange transaction prior to offering their best exchang rate, allowing you to benchmark and compare accordingly about the savings that can be made. International payments can be made online and the more you transfer the lower the fees. To get the best exchange rates when moving larger amounts of money it is a good idea to break up the amounts in several tranches and thereby smoothing out your average exchange rate in the event of volatile currency fluctuations.p>
If you are in the process of selling your home in France, feel free to give our dealing team a call on 0207 723 7000.
We have made every effort to ensure that the information published here is correct and accurate, however you should check and confirm the latest exchange rates with The Currency Club directly prior to making a decision. The information published is general and does not consider your personal objectives, financial situation or particular needs. Full disclaimer available
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