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French Taxes and Costs

cote d'azur property taxes and costs

Wealth Tax
Inheritance Tax
Income Tax
Capital Gains Tax
Sinking Fund
Communal Charges
Taxe d'Habitation
Taxe Foncière

Wealth Tax

French wealth tax ( Impots de Solidatité sur la Fortune or the ISF) is payable by those with net assets above 1.3M€ - on all their assets - evaluated as at 1st January 2012. This applies to individuals who are not domiciled in France - they will be subject to this tax if their French assets are valued above this amount. The sum total includes any assets that are held by children under 18 in a family. Companies are never subject to this although individual shareholders will be.

Existing debts or taxes on the 1st of January can be offset against assets for tax purposes. For example a loan taken out on a property can be offset, even if this loan is taken out in the UK.

It is important to note that those who run a professional lettings business with a furnished property may be exempt under the professional assets category.

 We strongly advise you to seek advice from a professional tax advisor regarding your personal position with French Wealth Tax. Ask your Attika agent to put you in touch with the local experts

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Inheritance Tax

French inheritance law and tax are likely to apply to those having properties situated in France even if they are domiciled elsewhere in the world.
French law has a concept of forced heirship which means that certain relatives (children, parents and now the spouse in exceptional circumstances) are entitled to part of the deceased’s estate. These beneficiaries cannot usually be disinherited.

A Will can be either French or English but must be expertly drawn up so that it will have full effect in any other jurisdiction. It is important to consider that insufficient planning can result in there being a taxable French estate.

It is possible to obtain spouse’s inheritance tax exemption by signing a post-nuptial agreement.

If the forced heirship concept concerns you, then it may be beneficial to purchase the property through a company in order to preserve inheritance flexibility. Shares in a company are deemed to be a moveable asset when the shareholders are non French-domiciled and as such can be passed on according to British law under a British will.

It is essential that you seek the advice of a Notaire or a qualified advisor before the completion of a sale/purchase, it may be in your interest to change your marriage certificate so that have more flexibility over who you can leave your property to. To change your marriage certificate and thus your title deeds after the purchase can be lengthy and costly.

For more information on inheritance laws in France please contact us or seek advice from your notaire.

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Income Tax All income generated in France is subject to French income tax. There are different tax rates depending upon the amount of income generated, the person or company owning the property, whether the property is furnished or unfurnished etc. It can only be assessed on a case by case basis. ATTIKA INTERNATIONAL will be happy to put you in touch with qualified advisors so please send us an email info@attikainternational.com back to top


Capital Gains Tax

There is no capital gains tax to pay on the profits from selling your French Property if you can prove that the property is your principal residence and it is held in your personal name.
If the property is a second home, there is a progressive tax deduction which means that you need to wait for 30 years until your property is  free of Capital Gains Tax.
If you are non French-domiciled but living in a country in the European Union (eg UK residents), the capital gains tax rate in 2007 is 16% on secondary homes in France. If the tax payer is not in the EU then a 33% rate is imposed. For French-domiciled individuals the rate including the social contributions is 32.5 %. This does not apply to developers or trading companies.
The gain is calculated on the difference between the sale price and the original purchase price. In addition to the purchase price certain costs such as home improvements can be deducted (either the real cost or a value of 7.5%). Only home improvements carried out by a registered professional can be taken into account.

After 5 years, the owner can ‘increase’ the original purchase price by 15% to account for improvements and expenses even without justification.

For more information on CGT we advise you to contact a qualified financial body or your notaire. If you would like us to put you in touch with one then please do contact us info@attikainternational.com

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Sinking Fund

This is known as the “Fonds de Roulement” and if you purchase in a copropriété (an apartment block or a villa in a domain with communal facilities) you may have to contribute to this fund which is used to cover exceptional costs such as the emergency repair of a lift, leaki repairs, changing of entrance doorway etc. It is generally a set sum which is due three times per year. The manager of the property will give a breakdown of sums spent once per year and refund any remaining money. When an apartment is sold, the ‘syndicat’ ( property manager) will refund the seller their share of outstanding money remaining in the sinking fund and the purchaser will be expected to contribute this amount back into the fund. The Notaire should let you know how much is owed in advance. However, it is always worth posing the question to the Notaire or the estate agent.

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Communal Charges If you purchase an apartment in a residential block, or a villa in a domain you are likely to be liable for “charges de copropriété” or condominium charges, which tend to be monthly charges to cover maintenance of communal facilities, the guardian's wage, insurance etc.  Older style blocks without lifts in the town centre may have very low charges of around 50 Euros per month (sometimes even less in the Old Towns), while others may be around 120 Euros but include hot and cold water and heating. Highly luxurious blocks with 24 hour security, parkland, pools, club house and tennis courts may charge many hundreds or even thousands of Euros per month. So it is always worth asking what the charges are if any.

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Taxe d'Habitation This tax is paid by the  person who occupies the property on the 1st of January each year, with the execption of short term rental tenants. This tax  is probably the nearest equivalent to UK council tax. The Taxe d’habitation is also assessed using the cadastral value. The property has to be habitable, so if it can’t be occupied due to lack of water/electricity or due to substantial renovations it will be exempt from tax during that period. If you are the owner and are deemed to be in occupation i.e. the property is not rented out long term, then you are liable to pay this tax even if you do not use the property at all. It is usually more or less equivalent to the Taxe Foncière. For example, for a one bedroom flat in Cannes or Nice you can expect to pay around 600 to 800€ (and more)per annum.

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Taxe Foncière This is a tax paid by the owner of the property. The charge is based on the notional rental value - the cadastral value - which is assessed by the local authority on the 1st of January each year. New Build properties can benefit from a reduction or exemption from this tax, as can properties which have been substantially renovated. You will be charged on a yearly basis for this tax which is generally very affordable; for example you can expect to pay around 750€ per annum for a one bedroom flat in Cannes centre.

When you sign the final exchange at the Notaire’s office, the seller will have already paid this tax for the whole year ahead. You will therefore be required to refund - on a pro-rata basis - the amount of this yearly tax to the seller. For instance if you sign for a property in June, the Notaire will calculate the value of 6 months’ tax and you will be expected to refund this amount.

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Fiscal Representation tax - Overseas residents selling their properties will also have to pay a Fiscal Representation tax which is around 0.65-1% of the full sales price of the property if the price is over 150 000 Euros. Your Attika representative will put you in charge with an organisation who do this calculation for you. Remember this is only applicable when you are SELLING your French Property and not when you are buying

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