France Home Finance on TV

France Home Finance and their clients have participated in a number of television shows about French property and real estate in Paris.

Here are two of our shows that capture the excitement of the search and the anguish of decision making (which we personally understand!) when seeking your perfect home in France:

Seeking a Pied a Terre and Investment Property in the Heart of Paris - HGTV House Hunter's International Episode HHINT-3607H

Ashley Maddox spends her time working between the US and Paris and decided that a long-term stay in a cramped hotel room wouldn't do. An architecture buff with an entrepreneurial spirit, Ashley decided to purchase an apartment that could serve as both a pied a terre and an investment property. But Paris is one of the world's most expensive cities, and with property prices rising more than 20% in recent years, finding the centrally located two-bedroom flat Ashley has her heart set on may be an impossible task. Along with her friend and advisor, Tahminae from France Home Finance, Ashley weighs space versus location, and vacillates between a renovation project that will allow her the freedom to make her own mark and the convenience of a ready-to-rent flat. Watch what happens when House Hunters International touches down in the City of Light.

Parisian Brokers Turned Buyers Move to Provence HGTV House Hunter's International Episode HHINT-4913H

Parisian real estate pros Tahminae and Martin from France Home Finance are five months pregnant and about to experience the market from the other side. They want a second home for their family in the peaceful region of Provence, but finding the perfect stone house in one of the most expensive areas in the world won't be easy with their small budget. In fact, real estate agent Jacques Leroy knows it's impossible but these brokers won't settle until every stone has been turned. Watch House Hunters International for the pursuit for perfection in Provence, France.


French Property Tax Update 2014

French Property Tax has changed once again - here's what you need to know:

French homeowner’s should be aware of the following taxes when purchasing property, even if they are not French residents. Figures must be taken as a general indication only and Flat Hunter strongly encourages you to seek expert legal or accounting advice based on your individual situation and project. We are happy to connect you with trusted experts at your request.

French Property owner’s tax (“taxe fonciere”) – this annual tax is paid by the owner of the property based on the size and location of the property. As Paris is a very densely populated area, the tax has remained quite low over the years. The agent or seller will disclose this tax as part of the property information. For example, for a 75 m² apartment in central Paris, it can be 600 to 800 euros.

French Property user’s tax (“taxe d’habitation”) – this annual tax is paid by the user of the property so if you rent your property long term, it can be passed on to the renter. It is based on the size and the location of the property but also on the revenues of the occupant to some effect so the seller cannot disclose what it will be for the buyer. It is often very close to the amount of the property owner tax.
Revenue tax (“IR” or “impot sur le revenu”) – this tax would be due on any rental income collected in France for renting the apartment. The taxable rental revenue can be reduced by interest paid on a French mortgage, value improving renovations and management fees for example. Other deductions may apply based on the tax status you choose. The tax rate depends on your global revenue but should be less than 25% in most cases.
Since August, 2012, the social contributions apply on the rental income so that an additional tax rate applies on the tax rate based on the rental income (tax rate + 15,5%)

Wealth tax in France (“ISF” or “impot de solidarité sur la fortune”) – this tax is calculated on the total annual market value of all your real estate assets, cash, investments and other valuable items such as fine art owned in France less any French loans outstanding on the property. Therefore taking a French mortgage can help you reduce or avoid this tax. Paris apartment owners - be sure to check the value of your Paris real estate annually to know if this applies to you.

As an indication, the current wealth tax rates on your total net asset value are:

Total net asset value Rate (%)
Until 800.000 € - 0,00%
From 800.000 € to 1.300.000 € - 0,50%
From 1.300.000 € to 2.570.000 € - 0,70%
From 2.570.000 € to 5.000.000 € - 1,00%
From 5.000.000 € to 10.000.000 € - 1,25%
Superior to 10.000.000 € - 1,50%

For French residents, the calculation is based on their worldwide assets.

For non-residents, the calculation is based on assets located in France, including:
- furniture and movable property located in France;
- real estate assets held directly or through a real estate company (such as an SCI);
- net value of shares of a company located in France (the value of the credit account in favor of the shareholder, in French the "compte courant d’associés”);
- net value of shares of a company located in another country where the majority of the real estate assets are located in France.

Capital gains tax – for a property that is not your main residence, capital gains tax after a sale starts at approximately 34.50% for a French tax resident and at 48.83% (33.33% + 15.5%) for a non-European Union tax resident (the rate is 34.50% - 19% + 15.5% - for a European citizen residing in a European Union country) and is progressively reduced each year after the 6th first years to arrive at 0% after 30 years. Therefore if you hold your property long enough, you won’t pay any capital gains tax at sale. There is no capital gains tax on your primary residence.
For all types of properties (except building land), the capital gain is totally exempt:
- from the CGT part of the tax: after 22 years of ownership,
- from the social charges part of the tax: after 30 years of ownership
• For building land: Exempt after 30 years.

Temporary 25% Discount on the Capital Gains Tax
Applicable: to property sales signed between 01/09/13 and 31/08/2014,
• EXCEPT sales:
- of building land,
- of shares of companies whose capital consists mainly of real estate,
- to a spouse, PACS/civil partner, live-in partner, ascendant, descendant
- to a company owned by the seller and/or the persons listed above.
• to the net capital gain after deducting the allowances for length of ownership (CGT + social charges),
• for calculating the tax basis of the Supplementary Tax (article 1609 9 G of the French Tax Code) (calculated on the CGT part of the tax).

Tax on property owned by a foreign company or the “3% taxe” – if the property is purchased by a non French company, the annual value of the property will be taxed at 3% each year unless you file a report to clearly disclose all the shareholders of the company. This also applies if a non-French company creates and holds shares in a French company to buy the French property. Definitely seek the advice of a French accountant if you plan to purchase this way.

French Housing Market Outlook 2014

Paris apartment prices soften, but not always on the apartments you want to buy. Overall, prices are on a slight downward trend.

Paris apartment prices
In January 2014, there was a slight increase in prices after 6 months of consecutive price softening however this is mainly regarded as a seasonal effect and the outlook for further price reduction in 2014 continues. A 3 to 5% average decrease is often cited among the agents we speak with. Unfortunately, this must be taken with a grain of salt. These figures reflect the average of the overall market – not the subset of the French properties most of our clients would like to buy (great light, nice entry, logical layout, upper floor, good location, etc.) The apartments with “good bones” have seen only a slight reduction if any. There is a bit more room for negotiation in Paris real estate over 1.5 million euros.

French real estate prices
The property market in the rest of France is also trending towards a slight average decrease however ups and downs vary by locale. In Q3 of 2013 statistics measured, houses lost value more than apartments (-2.3% for houses vs -1% for apartments annually.)

What is the impact of foreign buyers in France?
Interestingly enough, almost 70% of foreign buyers already live in France and more than 30% of non-resident buyers are French expatriates. According the latest statistics from the French Notaires report, non-resident foreigners accounted for less than 2% of French property buyers over the 2009-2013 period: 2% in the French provinces and 1% in the greater Paris region, although their proportion increased to 3% in Paris itself.

In the greater Paris region, the Italians are still the largest group of Paris apartment buyers at 25%. The next largest group is the United States with 5%. The British are very strong French home buyers in northwestern France. If you look at the pre subprime - Lehman Brothers crisis period (2002-2007), British French property buyers have sharply dwindled while the number of Belgian French home buyers has increased most regions. The Germans are still curiously absent from the French property market.

What will influence the French housing market in 2014 prices?
1) Credit availability

French banks have made it clear that they are less interested in lending French mortgages this year and very interested in opening investment accounts. This is mainly driven by a need for profitability (French mortgages are often loss leader products.) The second reason is increased capital requirements for banks post crisis. Banks in France are now required to have more capital reserves and therefore have less money to lend. Less lending can lead to French property price softening.

2) Tax on property transactions
The transaction tax (stamp duty) on property sales has increased this year up to 0.7%. This is not expected to have a major impact as the effect is market wide and relatively small.

3) Taxation of capital gains in 2014
In the wake of the dramatic change to the rule to exonerate capital gains on second homes held more than 15 years to 30, then the addition of social charges for non-resident sellers, the French government has come back with a special deal to reduce this tax by 25% for transactions completed by August 31, 2014. This is expected to create a mini rush of sales and allow a bit more room for price negotiation as the deadline draws near.

France’s Economy is Looking Up

The central Bank of France anticipates that the country’s economy will see growth of 0.8% during the second quarter, doubling the rate from the first part of 2011. French consumer spending also increased, as did hiring. Bloomberg also reports that the number of jobless surveys completed reduced.

Exchange Rate Forecast

The pound has slipped slightly against the dollar, following a revised forecast of economic growth, which put the country slightly below where it had been previously anticipated. At the same time, the UK’s inflation expectation has been lowered, thus alleviating pressure to increase the interest rate. However, the pound rose marginally on the euro.
As the debt crisis in Spain is continuing to be resolved with sovereign debt being auctioned, so that the debt problems will be restricted, it is likely that the euro will continue to strengthen in the coming months. The euro has climbed by 7% against the dollar this year alone.
This has impacted many potential French real estate buyers’ budget and thus increased demand for higher French mortgages to minimise exchange rate loss.


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» March, 2014: France Home Finance on TV

» February, 2014: French Property Tax Update 2014

» February, 2014: French Housing Market 2014

» April, 2011: France’s Economy is Looking Up

» April, 2011: Exchange Rate Forecast

» April, 2011: Outlook for European Inflation

» April, 2011: Why France is still Drawing Expats

» March, 2011: Euro Exchange Rate Outlook

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» March, 2011: Update on French Mortgages

» March, 2011: Rising French Property Values

» February, 2011: Role of the Notaire

» February, 2011: European Economic Outlook for 2011

» February, 2011: Key French Tax Deadlines for 2011

» January, 2011: The Complete Mortgage Process

» November, 2010: French Property Taxes

» November, 2010: The Benefits of Hiring a Mortgage Broker

» October, 2010: Qualifying for a French Mortgage

» September, 2010: Primary Costs Involved With a French Mortgage

» September, 2010: Fixed or Variable Mortgage Rate?

» August, 2010: French Leasebacks

» August, 2010: Compulsory French Life Insurance

» July, 2010: Commercial Real Estate Sector Must Meet Sustainable Criteria

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» June, 2010: Global Real Estate Recovery

» June, 2010: Second Homes for Wealthy French Real Estate Investors

» May, 2010: Increase in Confidence of French Real Estate Market

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