Coast and Country in France

I have been researching and writing about Fractional Ownership in France for the last eighteen months - there are not many examples of properties sold in France in this way and I thought we would set up a new website to offer this so we created www.HarmonyOwnership.com to offer properties and give help and advice.

I have removed a lot of the offers from that site as the more I looked into this subject, the less “comfortable” I was feeling about the way it is being presented.

All the people I found who are selling shares seem honest, trustworthy, sincere and enthusiastic - but - I believe most will face serious financial and legal problems with their shareholders when the implications of the French tax liabilities come home to roost.

There is a recent post in my which blog touches on a couple of the points I am worried about, a writer recommends an International lawyer who I respect, but although his firm claims experience with six thousand Fractional Ownership contracts, at present they have only completed two in France.

I know of properties for sale in France which, due to bad advice, instead of reducing their capital gains each year, actually have an increasing annual capital gain liability because they bought their property in an offshore company share structure.

Don’t get me wrong, I believe Fractional Ownership is a very good way of having efficient and viable use of a property, but I consider it a luxury purchase, not an investment and I think it should be done simply and totally within a French structure with no complications of overseas ownership or associations.

Fractional Ownership, French life, Investment, living in france, Personal, Real Estate

Share This

If you are looking for a place to stay in France then you may want to know what sort of town or village it is, how big, what shops and services, what sort of population and type of people, jobs, layabouts etc.

I get a lot of questions asking me if there are restaurants, how many English speaking people are there etc. etc. - to be honest, I don’t know the answers, but I can look very clever as I simply use this brilliant site which which has details of over thirty thousand places in France - the example on this page is Pouzols Minervois, a small hilltop village between Beziers and Carcassonne.

The information is usually to or three years old and comes from government statistics, but is does give a very good idea of the size, services, income, changes etc, especially if you use the comparison service

coast country france, Discover France, French life, Languedoc, living in france, Personal, Property rentals, Real Estate, Rentals

Share This

We (about us) have been living in the South of France, in Lyon and Languedoc, for the past seventeen years. We first moved into a rambling tenth century ruin in Nizas and then three years ago into our 19th century home in Montblanc.

I have said that, apart from wine there is only tourism in Languedoc - well, that is changing - the region is booming, commerce, distributuion and industry are now following the massive investment in road, rail and air connections to the South of France.

This is creating a growth in the housing market, on average, prices have doubled during the last six years, and, unlike some other regions, there is still strong growth indicated in most areas of Languedoc Roussillon.

However, pressure on the market in other countries and regions of France is encouraging some owners to drop their property prices in Languedoc.

Here are three properties which are very attractively priced…

Pezenas Town House
A classic town house in the heart of Pezenas - fully modernised, sold fully furnished - you can move in tomorrow - a very comfortable family home with the unique feature that it can be very easily adapted to three self contained apartments - this is a gem for a family home or an investment for 180,200 euro

Sorede Family Home
This 19th century property has been made into a spaciaous and confortable home - from the kitchen terrace you can see the Mediterranean and you are in the center of Sorede, one of the most popular towns in Languedoc Roussillon 4 bedrooms, 3 bathrooms, huge garage, garden, this property has the lot and the price has just been reduced to 260,000.

Pouzols Minervois Medieval Houses
If you want a real bargain and an exciting project, then this is a very special offer. Not one house but two medieval properties in the center of a fortified hilltop village in the Minervois, between Beziers and Carcassonne one house is ready to live in , part is needing revovation and one is original with the old stone sink and original Languedocian fireplace. There is more, the main house even has a swimming pool on the huge roof terrace looking over the vineyards from the highest point in the village. The owners are sad to part with this home they love, but it is all on offer now for 160,000 euro for all the properties, gardens and courtyard.

Building in France, buying a property, Discover France, hilltop village, Investment, Languedoc, Languedoc housing, languedoc region, leading real estate, living in france, Personal, Real Estate

Share This

There are strong links between Canada and France, although I do remember seeing a French Canadian film in France once which had to have sub-titles so people in France could understand the French spoken in Quebec.

Here is a mail I got today. If anyone in France would like to write to David and Kathy, please write a comment on this blog or contact me
===

Tony

We really like your site. Lots of information. We are living in Canada but would like to find a home in France. Our question to you is. Do you have any Canadians that you know of living there and in your database? We would like to get the perspective from their point of view as we’re not just a quick link across the channel.

Many thanks,
David and Kathy
Barrie, Ontario

French life, fruk, living in france, Personal, Real Estate

Share This

I have been involved in the marketing of property in fractional ownership in France and started the first information website www.harmonyownership.com about this interesting way of sharing the real freehold of a property in France early last year.

However, I decided not to jump in the deep end until I had thoroughly researched many of the tax and legal implications fractional ownership has in France. I believe the ways that many offers are being made and the way shares and ownership is structured through American or British companies is going to cause serious problems for the shareholders in a few years time due to the French tax rules.

One person I am following closely and who I believe is offering a very fair and well structured fractional ownership of Paris apartments is an American in Paris, Steve Navaro - you can see his offers through his website at parishomeshares

I plan to be in Paris in the next couple of weeks for a few days, one reason for my visit is to meet Steve and I will report about him and his property offers in this blog

Fractional Ownership, French Property, Paris, Personal, Property in France, Real Estate, shared ownership

Share This

There are some changes afoot in the tax and social security system for people living in France, things like health charges for early retired new residents and wealth tax. I will write up some notes and references to good sources.

One recurring question is about Capital Gains Tax on selling a second home - as far as I am aware there are no recent (this year) changes and it simply depends on how long you have owned the property, where your main residence is and if you have had allowable works done by an approved registered French builder.

The Notaire dealing with the sale is responsible for decisions on what is due and collecting the tax when you sell.

Her are a couple of recent emails I have had.

===

Hi!
We are a US couple who has owned a home in the Ardeche for 6 years. We are interested in selling it and wanted to find out what type of capital gains taxes, and other fees would be involved in this transaction. Is it true that there is a 10% discount off capital gains for every year after 5 yrs that you own the house? Do you have any idea where we can get more information on fees involved and other important information on selling a house in France as an American. Do we need to claim any of this income in the US?

Thanks in advance for your help! We greatly appreciate it.

All the best,
Susie

===

Hello Susie,

As a US resident you will pay 33 percent capital gains tax on the difference of the purchase price (including agents and legal fees) and the selling price.

This reduces by 10 percent a year after five full years of ownership, so after the 15th year of ownership (usually in the 16th year) there is no tax due.

The tax is collected by the Notaire handling the sale.

There are no other costs you have in selling, the taxes and Notary fees are paid by the purchaser and the realtors will add their commission to your selling price.

If you have had significant alterations done by a French registered builder (extensions or other added work) the cost of the valid French invoice can be used to reduce tax - but repairs (even major repairs), decoration or work you do yourself cannot be offset.

After French taxes, any profit you make on the sale will need to be declared to the IRS in the USA. I advise professional advice regarding your position in the USA.

Hope this helps - do let me know how you get on

Best wishes

Tony

===

NB

The tax due for a European Community resident is 16 percent

===

Tony
My wife and I have a ski apartment in Chamonix worth £200,000, which we bought in 1991 for £76,000.  We would like to give it to our four children. We have seen a French Notaire who says we can use “Usufruct” to do this without paying any French tax.  Charges would be £4,000,and it would be no business of the British tax authorities.  Our accountant says otherwise.  She says we would be clobbered for about £40,000 CGT,less indexation and personal allowances.  Can you advise us where to go from here?
David

===

Hello David,

The French Notaire is correct as you will have no CGT to pay.

Capital Gains Tax  (TVA in France) on a maison secondaire for a  European resident is 16 percent. However this reduces by 10 percent per annum after the fifth year so after 15 full years there is no CGT to pay on your property as you bought in in 1991. The maximum CGT you would have been under 20000 pounds anyway - your accountant is well out of order.

To use a Usefruct and to transfer this to your children while you have the full use and benefit may be a good idea as this will reduce your capital for wealth tax considerations.

Do let me know how you get on

Sincerely

Tony

Building in France, fruk, living in france, Personal, Real Estate

Share This

I thought I would publish this reply I made to an enquiry for a property I am selling as I get a lot of questions about the cost of renovations.

There is a big difference in DIY or home repairs in the UK or USA compared to old houses in Southern France. Houses here are typically stone built using building techniques which had not changed for a thousand years. It is hard to date some houses as the contruction and style altered little from the 10th to 20th centuries and the massive beams and stones with lime morter and roman tiles are a million miles from timber frames and concrete blocks.

I have seen only too often financial problems when an enthusiastic purchaser starts a renovation project, only to find their money has run out less than a quarter of the way through the project.

The bottom line is that there is no cheap solution, skimp the work or do it badly and the property is probably worth less than you paid for it. Do it well and you will have a gem of a property, but it may not be the bargain it looks at first sight.

Caveat Emptor

===

Hi

Please contact me now about medieval house to renovate

medieval house to renovate ref35

What do you anticipate the costs for renovation and what is the availability of craftsman? Thank you.

Carol

===

Hello Carol,

It is impossible to give a simple reply to any questions relating to costs, my personal observations suggest that any property in France, to a good standard of occupation and quality, will cost from 2,000 euro per square meter of living area - plus a premium for land/gardens/convenience/etc. This is for property in Languedoc, Paris is from 6,000 to 12,000 euro and prices through France vary from 1,200 euro to 12,000 euro per square meter or more.

I have a lot of property on offer and some interesting old properties are not expensive, but conversion can be expensive - renovation will cost from 3,000 euro per square meter and there is no limit to costs - this particular property is interesting - it is in a super village and has potential. The owner will accept a fair price and you can have a rare property. You could own a nice small property for under 100,000 euro

Always take care selecting work-people, there are many good tradespeople in France, but there are also a lot of fools and rogues - I can advise a little to avoid bad mistakes.

Let me know your wishes

Best Regards

Tony

Building in France, buying a property, Discover France, French life, French Property, Investment, Languedoc, Languedoc housing, living in france, living in france, Personal, properties in the south of france, Property in France, property in languedoc, Real Estate

Share This

I just wrote a post on my blog at New Bricks and Pantiles giving some idea about the cost of renovating old stone properties in the South of France.

This reply to another mail today about doing the work and living here I hope answers a few more questions about problems and pitfalls of renovations to old properties.

===

Tony

Seeking to move to Languedoc - Orientales/Aude preferences. I have successfully developed my own properties here in the UK and would like to do the same there.

I am something of a mixed bag with professional experience in law and management consultancy/venture capital and had a career also in sales/marketing/advertising, I have written and recorded an album but can lay bricks, plaster, 1st and 2nd fix carpentry, roofing, some plumbing and wire a house.

No French initially so thinking about doing week on/week off in the UK to keep money coming and not depleting capital except for buying/renovating property (mortgages in principal offered), but my wife is a little concerned to be left in the on weeks with 4 children and no French initially. Are there possbilities to assist english speakers/ex pats with my skill set to avoid the week on/off scenario?

Once fluent hopefully many more opportunities will open up in say 18 months to 2 years.

Ideally would look to rent to live in for at least first year + and buy to do up.

Is this a realistic plan and what pitfalls do you see. Would CGT be punitive in non-resident developed properties or can this be avoided by moving into for say a fiscal year and then selling on?

Regards

Martin

===

Hello Martin,

Many thanks for an interesting letter.

The first handicap to developing property for resale is that there is a 7 percent tax and legal fee on top of the purchase price paid by the buyer. The purchase price usually includes the selling agency commission this is from 6 percent upwards (including tax) so the base property value is already elevated.

Unless you are a resident French tax payer there is 16 percent value added tax on the sale of the property if you resell within 5 years (this reduces thereafter to zero after 16 years). You are correct in that if it is your Maison Principal then you do not pay Value Added Tax (TVA) but you should consider that this is the main family home and you have to be French tax registered for at least two years to avoid this. You may not have a problem renovating and moving once, possibly twice, in a relatively short period, but after that it would be looked at carefully by the Notaire and possibly considered that you were trying to evade taxes.

The 16 percent tax will be based on the difference between your purchase price (including tax) and your selling price - the only building costs allowable can be from correctly certified invoices from a registered builder in France. If you do the work yourself, unless you are a registered builder, the time and materials cannot be offset for tax.

Personally I believe working one week on one week off would put a huge strain on you and your family - you lose two days a week simply traveling and the disruption and cost does not seem comfortable or viable to me.

Renovation costs for older stone built properties are much higher than every person I have met who has done this (including me) ever calculated. The cost of renovation per square meter of old stone built properties is from five to fifteen (the sky’s the limit) times the cost of building new. Very careful calculations need to be made with a lot of local and professional knowledge.

There are far too many stories of people buying houses and asking local builders to “quote” and then finding the cost is many times higher than “quoted” - these quotes (devis) are always estimates and not fixed quotations - the same logic applies if you are planning the work yourself - there is no similarity in working with the average British property. For example, stone walls in Languedoc are from 65 cm to 3 meters thick - one small window I put in my old home here took over 12 tonnes of rock to be removed and 2 weeks hard work.

A large number of English speakers are moving to Languedoc, most towns and villages have some English speaking community activities, book fairs, social stuff etc.

In Languedoc making a living is very hard - there are few jobs and your chances of getting employment are, to be blunt, zero. To get any casual work, legally, you have to register and get full social security approval - this will immediately cost you about 500 euro a month in social charges - you cannot claim any security benefits.

These are some of the pitfalls - we did it nearly 20 years ago, have survived and do not regret a moment.

Best wishes

Tony

Building in France, Business in France, buying a property, Discover France, French life, French Property, french tax, french tax authorities, immobilier, Languedoc, Languedoc housing, languedoc region, life in france, living in france, Personal, properties in the south of france, Property in France, property in languedoc, Real Estate, stone properties

Share This

I was going to title this “are property prices in France falling” and I left off the question mark as it messes up technical things. I changed the title to Languedoc because France has so many regional variations I would need a huge spreadsheet to show the results - also I live and work in Languedoc.

My personal observations on sales made last month in Languedoc are that prices are not rising, although a lot of properties which have sold have been bought at the asking price.

The market is bouyant and there are a lot of buyers here at the moment, but ther eare a lot more properties on offer and a huge volume of new building.

Looking at some figures from the Noataires sites and guidelines of average sales across most regions indicates that prices are falling in most places over the last three months, although the trend has been for an overall increase of around ten percent over the last twelve months.

Interestingly, in most areas of Languedoc, higher priced properties have had stronger growth than the average.

My theory is that in Languedoc there is a big investment and a lot of incentives to build new housing estates, land has been released on an unprecedented scale and tens of thousands of villa/bungalow type homes are being built at the moment.

Every village seems to have fresh fields of homes growing as fast as the grapes are on the vines this year. This is making the classic landowners 19th century houses in town centers a scarcer commodity and may be one reason for the disparity in price levels.

What I am seeing is a lot of overpriced property on the estate-agents books, owners are very optimistic about what their property will sell for and seem to pluck numbers out of the air, agents then put their commission on top of this and end up with a fat portfolio of overpriced offers.

It is very tempting for owners to do this as prices have been steadily increasing for over ten years and with that sort of track record it is too tempting to think it will go on for ever - but - average sales prices for most properties have dropped over the last three months so a property put onto the market with an optimistic price tag is unlikely to shift.

Building in France, buying a property, coast country france, French life, French Property, Languedoc housing, life in france, living in france, Personal, property in france, property in languedoc, Real Estate

Share This

The dream for many people is to move to France and combine this with running a BandB or a Chambre d’Hote, and there is a very strong demand for good quality BandB accommodation in many parts of France.

Several properties we are offering from the real estate site on Coast and Country are ideal for a Bed and Breakfast operation.

It can be a very satifying thing to do, Carole and I did this for six years in our home in Nizas, although most of the time we rented as apartments rather than as a bed and breakfast.

I usually advise anyone considering this move to only look at offering top quality accommodation and not to go for the budget end of the market, this is catered for by the low cost hotels like Formule, Etap and Camponile with good clean ccommodation from 30 euro a night for up to four people.

If you offer something better then, depending on the level of comfort, the location and the facilities you can charge from 40 euro to 90 euro a night for two or three people

The key for selecting a property for a successful BandB is choosing the right location in the right town. I know I am stating the obvious, but I have seen very significant changes in the demographics of accommodation over the last fifteen years in France, especially in Languedoc.

What may have worked successfully in 1999 may be an uphill struggle now. It is not just that property prices have increased substantially, but there has also been a disproportionate increase in vacation rentals combined with a change in the type of accommodation required.

To buy a property and then make a living from it is difficult, to buy a home with five BandB and sufficient space for yourself and the clients, within half an hour of the Mediterranean will cost a minimum of 500,000 euro - the income for this at an average of 60 euro a night is a maximum of about 4 percent return on your capital assuming 100 percent capacity - in reality you would get less than 2 percent return on your total capital investment as a BandB and this includes your time, feeding and cleaning, but you do have a home and a lifestyle.

Business in France, coast country france, French, French life, French Property, Investment, Languedoc, Languedoc housing, living in france, Personal, Property rentals, Real Estate, Rentals

Share This