The transaction of a property in France will differ substantially from what you would experience in other countries throughout the world.

Once a property has been chosen & a price agreed, a written agreement should be concluded as soon as possible, especially as there is a danger of finding that the property has been purchased & the paperwork concluded by another party.

The two most common forms of enforceable written instruments are a purchase agreement (compromis de vente) & a purchase offer (offre d'achat). These documents are normally in a pre-printed format & are usually completed together. The documents define the terms of the sale, & indicate any clauses or other conditions of sale.

The purchaser will not be given a copy directly as it will be mailed to him by recorded delivery. The purchaser then has 7 working days to decide to proceed with the purchase (a period of reflection). Should the purchases change their mind they must notify the vendor of their intention by registered post within 7 days. The deposit is usually 10% of the purchase price, if after the 7 days of reflection the purchaser changes his mind & decides not to buy, the deposit is forfeited. The deposit will be returned should any of the clauses not be realised, i.e. not obtaining a loan or building permission for a pool etc. The agreement can state that should the vendor change their mind they will be financially penalised typically to an extent equivalent to the deposit.

Once a written agreement has been signed by both parties, a deposit paid & 7 working days have elapsed the contract is binding. From thence on, the matter will be handled by a notary. It is very important to understand that the notary does not act for you & may not seem to be acting in your interests. This is because they are, by law, a servant of the State & is mainly responsible for seeing that property transactions & title are properly concluded.

The Notary will:

1. Hold the deposit in his escrow account (which cannot accumulate interest or be touched without the client's consent) & will be deducted from the amount due on completion.
2. Be responsible for the search concluded on the property, to ensure that there are no planned constructions which would devalue or spoil the property.
3. Establish title to sell, & indeed that there are no financial liens on the property.
4. Establish whether a 'syndique' on an estate is owed money or has decided on any major works on the property.
5. Examine compliance with all the measurements, zone rule & anti-parasite rules .At this stage should any of the searches present something important the purchaser will have valid reason to withdraw from his acquisition, the deposit will be returned & the contract broken.

Financing

Loans are generally on better terms in France. We are able to introduce you to reputable financial advisors who will provide details of their interest rates & conditions. It is usual to obtain a loan of up to 70% of the purchase price. You may well be asked for tax returns, justification of revenue & to have a health check.

When the loan is granted & the finance contract signed there is a period of 10 days of reflection whereupon you can change your mind. It is important to realise that you cannot sign the acte authentique (final sale document) until this period has elapsed. Should you decide to purchase with a loan there will be a charge levied pro-rata by the notary for the dossier & provision should be made for this.

French Property Taxes

Local Taxes

There are two local taxes which are both based on the property's theoretical rental value which is adjusted in line with inflation. The rates of tax will vary from region to region due to the varying rates of tax imposed by the regional & local governments.

Taxe d'Habitation

The occupier of the French home is liable for this tax. It is due of the 1st January & is payable by the person who was the occupier at that date. There are exemptions for over 60s & also if the property is incapable of occupation due to it needing extensive renovation. The test is whether the property is furnished & whether you can convince the local mayor!

Personal Taxation

As a non-resident property owner in France, you may be liable for income tax, value added tax wealth tax, capital gains tax & inheritance tax. Individual situations vary considerably & it is best to seek specialist advice from a tax consultant who has knowledge of the French tax system.

Income Tax

Non-residents are obliged to make an annual return for income tax - impôt sur le revenue - if they receive income from letting property or from providing bed-&-breakfast accommodation. If you become involved in the management of any lettings, it may be possible to offset a proportion of your expenses against any income tax paid in another country.

Tax Foncière

The owner of a French home is usually liable for this tax, also known as 'impot foncière', a land tax which is generally payable in one lump sum on the 1st January in each year. Unlike the taxe d'habitation, apportionment can be made between the buyer & seller. If there is an apportionment this should be stated in the contract for sale. This tax is even payable on un-built land. It may be divided into two parts, one for the building & some of the land surrounding it, the other for the remainder of the land. There are exemptions for some agricultural land & the owners of new property have, at the time of writing, a two year exemption.

Inheritance Law & Taxation

If you buy a property in France, your ability to give it away or to leave it by Will is governed by French Law. This gives your legal heirs entrenched rights to a certain proportion of your French estate. This proportion is known as the 'Reserve Legale'. It is only the remainder, the 'Quotit disponible' that you can freely give away by a lifetime gift or a Will. To explain this complex situation it is probably best to give an example. Say, you are survived by one child then you can not give away any more than half your French estate either during your lifetime or by Will. If you are survived by 2 children then this limit is reduced to one third & to one quarter if you are survived by 3 or more children. Should you have no children then other members of your family may qualify as legal heirs & so enjoy entrenched rights to a proportion of the estate. You cannot vary the share of your French estate which each of your legal heirs is entitled to take in their capacity as a legal heir but you can vary out of which part your legal heir can take their share. A husband or wife is not a legal heir & has no right to the legal reserves. French law, does however, allow you to make certain disposals to your spouse which go beyond what she would be entitled to if he or she were a mere stranger.

The above information is intended only as a guide & is subject to errors, omissions & changes.