Buying French property as an investment
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Because of the very high costs associated with buying French property (generally around 20% on top of the purchase price, as explained above), buying for investment has traditionally not been an option in France. Indeed these costs (the high fees charged by estate agents and the state) are the principal factor that have kept French property prices so low. However, because of the huge interest from foreign buyers, property prices have risen substantially in the last ten years (doubled?)
If you are considering buying as an investment, you should bear in mind several things:
Capital Gains Tax.
If your main residence is in France and you live there for five years before selling it, you will not have to pay C.G.T. (but if you retain a home in a non-French country and then sell it, remember that that will be liable to CGT)
If your home in France is a second home (maison secondaire) and you have it for less than 2 years, you will be liable to pay 33.3% CGT on any increase on the price (less fees). After that, the CGT reduces by 5% from the 3rd year on, until 22 years later your CGT liability ceases. (if neither you nor your spouse own your principal residence, the rules are more advantageous)
You can offset restoration costs against CGT (but only if a French builder does the work! If you do it yourself, or get it done by someone else, only the cost of the materials, multiplied by three, will be allowed!).
It's cheaper to buy through a Notaire than an Immobilier
This is explained on an earlier page
The Marchand du Biens
The marchand du biens - dealer in real estate - is a legal instrument brought into being by the French government some years ago as an attempt to kick-start the French property market because of the very high overheads associated with property. By using it, Capital Gains Tax can be avoided. If you are a serious investor who wants more information and perhaps consultancy on the Marchand du Biens, we suggest that you first read our books (especially Selling French Dreams, see below), then email us via the site map.
This is one of a series of pages on buying French property and living in France, as can be seen from the site map. The next page is buying French property - I want to move to France