Investing in French property for non-residents
Before investing in property in France, foreign nationals should contact a professional to find out what conditions apply to their plans. The notaire will advise them before they commit and ensure that their investment is safe.
The foreign buyer
It will first consider the nationality of the buyer, his country of residence, his personal situation (if he has lived in France for example) and its matrimonial regime, if married. French law will apply, as the governing law regarding real estate matters is the law of the country where the property is located. The consequences on the purchase are therefore of higher importance as regards the ownership of the property, the tax system or its future sale.
Note however that in case of death of the purchaser, although escapes to French law. Since August 17, 2015 (effective date of the European Regulation of 4 July 2012), it is the law of location of the property that applies to inheritance , but that of the country of residence the purchaser. So what determines the persons to inherit and fix the amount of fees to be paid. You should know that special rules (bilateral agreements, the Hague Convention, etc.) apply to people from EU member states as well as nationals of countries that have signed special agreements with France.
Nothing also prevents the foreign acquirer from forming a company to acquire. Once again, the legal and tax rules applicable to the property will depend on the chosen status/scheme.
Financing the purchase
Buying property in France will sometimes involve transferring considerable amounts of money. Such transfers are checked by intermediaries such as banks and finance houses.
French notaires also check the origin of funds to combat money laundering. They may have to make certain formal notifications if they have reasonable doubts regarding the origin of the money used (TRACFIN - Traitement du Renseignement et Action Contre Les Circuits Financiers Clandestins - Intelligence Analysis and Action against Illicit Financial Channels).
French notaires also have to secure the transactions, for which they are liable to the foreign buyer and the seller. Once again they will check any transfers of money they are sent and the integrity of the banks handling them.
Foreign buyers also need to be aware of the taxes payable on property bought in France : the cost and the various taxes and dues. They also need information about the taxes payable depending on whether the property is to be used as a main residence or has been bought to let. The taxes payable once the property has been bought or is sold, often depend on choices made at the time of purchase (V.A.T., capital gains tax, use of an accredited representative, etc.). Once again, very different rules apply ranging from total exemption to heavy taxation. Foreign buyers should consult a notaire to examine all these factors.
- My landlord has issued me by bailiff leave for sale with indication of a net selling price. The real estate agency in charge of the sale claims me €30,000 agency commission. Do I have to pay them?
- I want to buy an apartment. My bank refused my loan. Can I ask the seller a staggered payment of the selling price?
- I'm selling my main home acquired 5 years ago. The notary claims a missing diagnosis: ESRIS. It was not provided to me 5 years ago. Am I obliged to have it done?
- I signed a reservation contract for the acquisition of a property on plan. This contract has been notified to me for more than 1 month, can I retract?