Setting French Property Leasebacks and Investments Against Tax
How to Avoid Paying French Tax
Thursday 17 March 2005, by
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.
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.
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 (Location Meublé Non Professionel - Non 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