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How to buy french homes: a guide before signing the contract

How to Buy French Homes: A Guide Before Signing the Contract

France offers real estate investors both an opportunity to be close to the bustling centers of the European economy, and also the idyllic and beautiful French countryside. With relatively low property prices, gorgeous settings, and a stable market, France seems to have it all for the interested buyer.

If you’re considering buying a home in France, keep reading for some crucial tips and benefits of the French housing market. The opportunities for profits are outstanding; however associated expenses can be fairly substantial and should be estimated prior to a final purchase.

1. Massive Rental Income Potential

France is a country of renters, meaning there are a lot of tenants willing and wanting to move into your property. If you’re considering the purchase of an urban or even country property with the intention of renting it, the vacancy rate in France is extremely low. This means you’re likely to get the unit rented quickly and for a long period of time.

That advantage is noteworthy, since a frequently vacant property is not only lost monthly income but can also become an easy target of vandalism.

2. The French Market is Slowing

After enormous growth in 2004, the French market is beginning to slow again. This is good news for investors because it means prices will be low for you. On the other hand, it could also become bad news if your property doesn’t appreciate over the years at the rate you hope.

3. Expect Higher Estate Agent Fees

Estate agents in France can charge fees as high as 15 percent, though most hover at about 7 and 8 percent. However, for the North American buyer more familiar with lower agent fees, this can be a shocking difference.

4. Be Careful About Capital Gains Tax

Should you decide to sell your French home in the future, you’ll not only want to make a profit, but you also must be careful of France’s strict capital gains tax. French natives are charged 26 percent of their profit, non-resident EU citizens are charged 16 percent and non-EU residents are billed a whopping 33.3 percent.

Despite this large taxation on real estate profit, the capital gains tax percentage rate is reduced over time the longer the house or land is retained by the owners. Knowledge of this tax should be taken into account as part of your investment strategy planning.

5. Be Prepared for Additional Solicitor and Registration Fees

Your solicitor or notary fees will cost you approximately 3 percent. Meanwhile, your registration fees will clock in at 6 percent with Transfer Tax costing 7.5 percent for resold homes and under 1 percent for brand new builds.

Before you buy in France, you need to be aware of the additional 16.5 percent you’ll have to pay on a resold home, not including any estate agent fees.

6. For Historic Properties, Check with a Lawyer

France has a very liberal housing market and legal system, but there are certain rules about heritage or historic properties, as well as vineyards. If you intend to purchase this type of property, consult a local lawyer and factor all known and likely expenses into your calculations before buying.

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