We all love France, it seems. The food, wine, landscapes and, in the South, the climate all feature highly in our list of loves of the country. Property in the South of France and the Cote d'Azur has become one of the most sought-after purchases in recent years with apartments in Nice, Cannes, Antibes and Perpignan being snapped up faster than they can be built.
One of the more popular ways to get onto the property ladder in the South of France, especially in the busy coastal areas and in the ski resorts, is to buy a leaseback property. Not only does this give the purchaser a guaranteed level of income over a long period but it frequently enables them to use the property for their own holidays too. And all the maintenance costs are taken care of. But don’t forget, at the time of completion you will need to ensure you have the extra 19.6% VAT available on top of the purchase price. This VAT is recoverable but will take up to 6 months to arrive. Most mortgage providers are prepared to assist with this but make sure you check before committing to buying a property in the south of France.
Tax is always an element of the costs of buying any property but in France the local community tax has a quirk which buyers need to be aware of. The person in occupation on 1 January in any given year is liable to pay this tax in its entirety, irrespective of when he or she ceases to occupy the property, and normally there is no apportionment with future owners. If the occupier does not pay, the owner will be liable.
As the UK and France have a dual taxation treaty in place you will not be liable to pay tax twice on any income you earn such as rental income from a property in the South of France. However, this will depend on your personal circumstances and it is important to use the services of a competent tax professional to ensure you do not end up paying more than you should – there is no incentive for either tax jurisdiction to chase after you to return overpaid taxes!
The language issue always needs to be considered when buying property in a non-English speaking territory as legal documents, tax forms and similar papers may need to be translated for you. Whatever you do, never sign something you do not understand – the costs of translating rarely outweigh the risks of signing a foreign document you cannot read.
Finally don’t forget to plan how and when to transfer your money across. If you leave this to the last minute and assume the bank will always give you the best rate can cost you another 2%-3% of the price when compared to planning it in advance and using a specialist money transfer company. Similarly, if you are moving to the South of France and planning to have money (e.g. a pension) transferred over regularly these companies can save you a lot in the course of a year.