Clé France

Anyone who buys a property in France will know that the first contract will have to have attached to it various inspection reports, known as diagnostics. The reports are provided for information, and it is important to understand exactly what they cover, what they mean, and what they do not tell you.

The nature of the searches to be carried out depends on the age, location and type of the property. If you are buying an apartment, there will be a measurement to establish the internal surface area. In many areas of the south and west of France there will be a termite inspection. Built before 1948 the property will probably be subjected to a check to establish if there is any lead-based paint.  

Built before 1997 and the inspector will look to see if there is any asbestos in the property. The drainage will also be checked. If there is no mains drainage, the system will be tested to ensure it not only functions correctly but it complies with current regulatory standards.

In addition to these inspections relating to the property itself, information must be provided about the physical status of the region - whether there is any known history or future risk of matters such as flood, landslide, avalanche, forest fire and so on. This report will give a picture of the whole area - and do not be surprised if there is a history of avalanche in an alpine resort. The two points to pick up from this are that it is important to establish in the contract that no such incidents have affected the property to be bought, and that there may be limitations on building because of any risks.

These inspections can however be somewhat limited. The termite inspection, for example, would only declare active infestation if the inspector saw them, but without actually breaking the surface of the wood. This means that the inspector will not declare that the property is free of termites: rather that he could not see any evidence of their presence on the day. Furthermore, the inspector would not declare if a previous infestation had left the woodwork so damaged it was about to cave in.

The result is that the inspections are strictly limited. They do not replace the benefits that can be gained from commissioning an independent survey – that could also be a good negotiating tool for the price.

For individual advice, please contact Matthew Cameron here.

We at Cle France - The French Property Network are proud to work in partnership with Ashton KCJ - Legal services. If we think our clients need further legal advice or have a specific legal question that needs solicitor involvement when buying or selling a property in France we can recommend Matthew Cameron and his team for expert advice.

The French finance bills for 2013 and 2014 have brought some changes in rates that may have an impact on the market. These measures have been thought out by the French socialist government as a way to improve French public finances and they affect residents and non-residents alike. They also affect purchases as they mean a rise in Notaire’s fees.

Your French Property Purchase:

Starting from the 1 January 2014 all the TVA rates have gone up. This means that current expenses will rise as the 7% reduced rate for restaurants, construction, and ebooks, has risen to 10%. However the 5.5% rate, for food, hotels and entertaining has fallen down to 5%.  

The main measure of interest for a property purchaser is the 19.6% standard rate which has gone up to 20%. Whilst this means that the rate is the same as the VAT in the UK, this entails a slight raise in the Notaire’s fees for all property transactions.

However one must keep in mind that the France and UK rates are not the highest as Spain and Belgium for instance have increased their rates to 21 %.

While this slight raise could have been regarded as not having dramatic consequences, another provision of the finance bill is more severe with regard to Notaires’ fees. These consist mainly in taxes other than TVA to the benefit of “Départements” or towns. The Notaire’s actual charge represents approximately 1% while the total fees on a purchase are usually about 7% to 8% of the price.

Starting from 1 March 2014  Départements have been authorised to raise their allocation up to a maximum of 0.70%. This means that the Notaire’s fees will increase accordingly.

Some Départements have already said that they will not apply the rise on 1st March 2014, whereas others have said they will apply the raise. As of now this list is not final. Given this uncertainty the Notaire will not have any other choice than announcing to clients higher fees by way of estimate that may be revised after the sale is completed. This is simply reinforcing to the old Notaire’s habit of announcing a provision.

When Selling Your French Property:

The main area of focus here is capital gains tax. A new regulation has made non-residents liable to pay social charges. A complete relief is achieved after 22 years of ownership with regard to capital gains tax itself, but after 30 years for the social charges.

The relief comes in gradually. This means that any seller should pay attention to the anniversary date when he bought the property, as this governs the total amount of indexation relief that is possible. The new capital gains tax calculation has become very complex and it is highly advisable to seek professional advice in this respect.

In a midst of all these measures there is a silver lining as from 1 January 2014, a non-French resident national of an EU Member State, Norway or Iceland who sells his property in France may be exempt from capital gains tax on the sale of a French property.

The exemption focuses on disposals:

- After December 31 of the fifth year following transfer of tax residence outside France;

- Without time limit, if the seller has free disposition of the property (that is to say that the property is not rented) at least since January 1 of the year preceding the transfer.

The exemption is limited to a single assignment and certain other provisos.

For individual advice, please contact Jean-Paul Vovor here.

We at Cle France - The French Property Network are proud to work in partnership with Ashton KCJ - Legal services. If we think our clients need further legal advice or have a specific legal question that needs solicitor involvement when buying or selling a property in France we can recommend Matthew Cameron and his team for expert advice.

Until the introduction of a French finance law in 2011, there had been a lot of uncertainty surrounding the French treatment of trusts. Since then, a new regime has brought in different rules regarding the inheritance and gift tax, wealth tax and income tax treatment of trusts.

There is now an obligation for trustees to declare the existence of trusts to the French tax authorities if the settlor or any of the beneficiaries are French resident, or if any trust assets are situated in France. Penalties apply if these obligations are not met, and it was announced at the end of 2013 that these are set to increase. The trust declarations must be filed annually during the trust’s lifetime, and further declarations are required if the trust is modified or wound up. 

The new regime has also introduced specific tax rates and rules applying to trusts which vary depending on the circumstances. Discretionary trusts, for example, will be subject to tax at 60% and therefore careful planning is to be advised. 

Tax charges will occur either when assets are transferred to beneficiaries or on the death of a settlor, regardless of whether or not the assets remain in trust. This means that there may be tax charges on the death of each generation of beneficiaries.

Consequently, it is important to think carefully before settling any French property on trust, or before including anyone who is a French resident as a beneficiary. Furthermore, should a beneficiary of a trust move to France, it may be appropriate to think about excluding them. For those already affected, there may be possibilities for reducing the impact of the regime; for example, deciding to wind up the trust. There are many factors that will require consideration, however, such as the inheritance tax and capital gains tax implications in both the UK and France. 

Should you be the settlor, trustee or beneficiary of any trust with a French connection, it is important to be aware of whether these new rules impact on you. It is also likely that your estate will be affected on your death if you or any of your beneficiaries are French resident, or if you own French property. This is because the law has been drafted in a wide reaching manner so that trusts arising on death under a will or intestacy will be included within the new rules.

One of the most important steps to consider is the preparation of a separate French Will, so as to avoid your estate becoming subject to the French trust regime. If your French property passes under your English Will, it is likely that it will be caught by the trust rules simply by virtue of the fact that the assets will come to be under the control of the executors or administrators. By preparing a separate French Will dealing with the French assets you are therefore likely to simplify matters for your executors and beneficiaries.

For individual advice, please contact Matthew Cameron here.

We at Cle France - The French Property Network are proud to work in partnership with Ashton KCJ - Legal services. If we think our clients need further legal advice or have a specific legal question that needs solicitor involvement when buying or selling a property in France we can recommend Matthew Cameron and his team for expert advice.

Bienvenu to the first blog from the French Legal Services team at Ashton KCJ.

Our aim is to produce these regularly, keeping you up to date with any important legal developments.

So, whether you already own a house in France, or are currently looking to buy or sell a French property, our aim is to keep you informed about the issues you need to know.

If you would like to discuss any of the points raised, then do please get in touch. 

You can speak to member of the team: Jean-Paul Vovor, who is a French national and holds notaire’s qualifications; Sarah Walker who is an English solicitor with a specialism in French and English inheritance law and tax matters or myself, a solicitor and head of the French team. We are all, of course, fully bilingual.

I hope you find the information interesting, and look forward to any comments you may have.

A bientôt!

Matthew Cameron

Head of French Legal Services.

We at Cle France - The French Property Network are proud to work in partnership with Ashton KCJ - Legal services. If we think our clients need further legal advice or have a specific legal question that needs solicitor involvement when buying or selling a property in France we can recommend Matthew Cameron and his team for expert advice.

It is always interesting seeing which property we have for sale in France gets the most "Hits" and when there is a French Property Exhibition in the UK it is even more interesting because the number of new visitors gives a slightly different result.

There has been one property that has left the rest standing and we think there is no contest as it is a really lovely home and a well priced property which has taken our "Star of the Show Weekend Spot" - This beautiful Traditional Longere in Brittany with a swimming pool - CXZ00703.

The organisers of A Place In The Sun exhibition even picked up on this property and made it there home page featured listing on the main Saturday of the Property exhibition -  if you want to see the listing on A Place in the Sun website then click here.

OR CLICK ON THE IMAGE - to be taken to the full property listing.

Having a property that has all the benefits of being in the countryside, but at the same time just outside of a town sounds like a bit of a tall order, but here is a lovely example of one. Set at the end of a lane with no neighbours, but within walking distance of a large busy village, you will find this glorious south facing Typically French Longere dating back to the 16th century, which has been fully renovated retaining all of its original character, including exposed beams and original character fireplaces.

The department of Morbihan in the south-eastern part of Brittany has a coastal area offering a micro-climate, the Morbihan Gulf on the south coast; where you will find the ancient town of Vannes. Morbihan is bordered by Cotes-d’Armor to the north, Ille-et-Vilaine to the east, Pays de la Loire to the southeast and Finistère to the west.

Morbihan’s main activities are agriculture, fishing and tourism. Oysters are cultivated in the Gulf of Morbihan. Tourism is popular along the Morbihan coastline and in the medieval towns and villages dotted around the countryside. Carnac is the French version of Stonehenge with stones laid in concentric circles by an ancient people.

These Megaliths and Dolmens and Menhirs are believed to have been placed there between 3500 and 1800 B.C and you see their symbols everywhere. Attractive Property in the area is easy to find with lovely Farmhouses, Water mills and sleepy Cottages in abundance.

For everything you need to know about French property visit www.clefrance.co.uk

Blog submitted by: David at The French Property Network - Cle France.