Guide to Buying Property in France

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Once you have chosen your property, our guide will help you negotiate the French property buying process. 

1. Signing the Agreement (Compris)

On finding a property you wish to purchase you will need to negotiate the terms, price and conditions of the sale with the owner. The next step, once you are in agreement, is to sign the preliminary contract (Compromis de Vente). This is a legal document and after ten days will be binding on both parties. Rules change frequently in France and it is best to consult with your notary about when this period starts.

Generally the compris will be signed in France with the Agent. Variants can be included in the compris, for example an Acte (clause) can be added if the name or names to go on the title deed have not been finalised. If a mortgage will be required to purchase the property, the details for this, including the name of the mortgage company, must be on the compris.

2. Paying the Deposit

Generally the deposit will be 10% of the agreed purchase price. This will normally be paid to the notaire. There are exceptions to this, if the agent holds a carte professionelle, is bonded and fully registered then you may pay them, but do not hand over the deposit to anyone else.

If for some reason the purchase does not go through, for example, if you write to the notaire and the agent that you do not wish to go continue with the purchase before the contract is binding (within seven days of signing the compris), then your deposit would be repaid. This would also apply if a condition had not been met, or the mayor or S.A.F.E.R. (a government agency that has the right of first purchase on most rural property that comes onto the market in France) could oblige the purchaser to give way.

If you decide after the seven days ‘cooling off’ period that you do not wish to complete the purchase and pull out of the sale you would lose your deposit. If however the vendor pulls out of the sale then you will receive your deposit back plus the same amount from the vendor.

3. On Completion

Generally it will take around two or three months to complete the purchase. During this time the balance of the purchase money must be paid into the account of the notaire, this must be done well ahead of the completion date. The notaire will prepare the documents, check that the deed of sale (Acte de Vente) is in order and have the legal title ready to be signed over. It is possible to have someone sign on your behalf if you give them power of attorney. An interpreter may be of use at this point if your French is not very good and many Notaires will suggest (or insist) that an interpreter is with you.

French Properties Taxation & Costs

There is a difference in France in the fees and taxes charged on older and new property.  On older property the fees and taxes total around 7% to 10% of the purchase price, (they may be higher if the purchase price is very low). The fees and registration taxes for a new property will be around 2% (+VAT) at the rate of 19.6% on the purchase price, (private sales are an exception). These fees exclude agents fees.

The Notaire’s fees are government regulated and are around 1%. If you require a mortgage you should allow around 2% of the cost of the mortgage for extra charges, these will include any extra fees charged by the Notaire, registration costs and any fee charged by the lender. You must also factor in any extra charges for your solicitor, avocet, financial advisor, surveyor etc. If there are any complicated clauses, or you require specialist advice additional to the normal Notaire’s responsibilities, the Notaire is legally obliged to advise you in advance if they are payable. There will be an ancillary disbursement of around a few hundred euros payable through the Notaire for the land registration, the local council enquiries and the national rural land agency (SAFER).

Taxes on older properties will be around 5.09% of the purchase price.

Off-plan and new property. On off-plan properties there is VAT payable at 19.6%, this would normally be added to the basic purchase price (it is worth checking that it has been included). Stamp duty on off-plan properties is charged at 0.7%. The same will apply if the property is under five years old and you are buying from a dealer or developer. If you are purchasing a property under five years old from a private vendor you will not need to pay VAT, but the stamp duty tax will be 5.09%.

Building land that is being sold privately will be charged 5.09% stamp duty. If a private developer is selling the building land then VAT will have to be paid at 19.6%, but the stamp duty will be reduced to 0.7% providing a commitment is made to build the property within 5 years.

Legal Update From 2003

Since the announcement on 16th June 2013 by Francois Hollande, the change to the capital gains tax system on sales of 2nd homes has been integrated into the 2014 finance bill. The change was applied from 1st September 2013 on sales of real estate apart from the taxpayer’s main residence and rented property.

The main change is that the tax reductions based on the holding period will be more progressive. Similar to how the tax was in the past, sellers will be granted total tax exemption from tax on real estate capital gains after a 22 year holding period, reduced from 30 years.

In addition to this there will be a progressive reduction in social charges and a total exemption from social contributions after 30 years.

IMPORTANT – Disclaimer :
All information provided is believed to be current and provided free of charge. No liability can be accepted for the reliability of the information and statements made as this is obtained from 3rd parties. We always recommend you take legal advice from a fully qualified Lawyer or Notary before buying a property overseas.

IMPORTANT – Disclaimer :
All information provided is believed to be current and provided free of charge. No liability can be accepted for the reliability of the information and statements made as this is obtained from 3rd parties. We always recommend you take legal advice from a fully qualified Lawyer or Notary before buying a property overseas.

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