Taxation

Since the acquisition of real estate in France and in compliance with tax laws you become the taxpayer in accordance with French law. Your status is taken into account: a resident or nonresident.

You are a resident if:

1. Your primary residence place is located in France (You live here for over 6 months).
2. Your principal place of business is located in France
3. Center of your economic interests: the main investments, the legal address of the center of professional activities are located in France, and you earn here most of your income.

As a resident of France, you should pay income tax (Impot sur les revenus). Non-residents pay income tax in case they have a source of income in France (income from real estate, agricultural, industrial, commercial and individual small-scale production). International agreements on bilateral taxation can contribute to exemption from income tax on income from French sources (an agreement between France and Russia on November 26, 2006). All this depends on the version of the registration of real estate - on an individual, a French company, SCI or other foreign companies. You may get the right for some tax credits and benefits. There are no similar taxes and the exact amount of tax is calculated individually for each specific property. For each option you choose you can calculate the lump-sum of the purchase, as well as the amount of annual taxes. Knowledge of French laws provides you with reduced amount of your tax payments legally. For example, processing real estate as a real estate property in the ownership of French or a foreign company you get the benefits of taxation. In addition, depending on the type of the company your personal data may appear in documents of the property or the owner's name will be hidden. In addition to the income tax in France, the following types of taxes on real estate exist:

Real estate tax (Taxe Fonciere)

- An annual non-fixed property tax on private ownership, regardless of place of residence of its owner. The amount of tax depends on the type of property and its location. This tax includes tax on the building and land tax. If the owner sells the property within one year after the property tax has been paid for the whole year the unused portion of the tax will be returned to the owner by notary in the transaction day. New houses and apartments are exempt from property tax in France during the first 2 years after commissioning.

Housing tax (Taxe Habitation)

- An annual property tax for the housing, which is the residence of the owner or tenant. In calculating the tax are taken into account the incomes of persons using the property for a living. This tax is calculated based on the notional value of the rental villa or other real estate. All data entered into the inventory of real estate registration office area, where the given property. January 1 of each year, the property owner must pay tax on accommodation in France.If the owner sells the property within a year after tax rates have already been paid for the whole year, the unused portion of the tax owner is not compensated.

The property tax (Impôt de Solidarité sur la Fortune)

This tax is paid each year on all fixed assets in excess of 790,000 EUR on 1 January of the tax year. Fall under this rule without exception, property owners, both permanent residents and nonresidents, ie living in France less than 183 days a year. For non-residents of France accounted for only assets located in France. In the calculation uses a progressive scale rates from 0.55 to 1.80%, taking into account the current system of discounts. The tax return is filled each year and must be filed no later than July 15. Before you send a tax return, you will get a tax identification number, taxpayer identification number. If this property is a primary residence, the owner laid off 30%. Base for tax calculation is the market value of real estate. This tax can be avoided completely due to the loan IN FINE.

Tax on profit from the resale of real estate (Plus-values immobilieres)

payable if you decide to resell the property, purchased in France.

1. If you have a resident status in France and your property is the main place of your residence, the tax on profit from sale of real estate ownership is not paid by the subject of more than 5 years.
2. If you do not match the status of resident of France, but live in one of the countries outside the European Union, the tax on profits from property sales is paid at a rate of 16%.
3. If you do not match the status of resident of France and not resident in countries outside the European Union, the tax on profits from property sales is paid at a rate of 33.3%.

Resale in the first year after purchase is taxed 33.3% (this% decrease from year to year). After 5 years of tenure per cent tax rate begins to decline by 10% per year. After 15 years of home ownership tax on profits from the sale of French real estate is not paid. This law is directed against property speculation.
Cost comprises the following components: profit from the resale price = sales - cost of purchase - Taxes. It is important to keep evidence of expenditure for the purchase and repair (notary fees and estate agency, checks with the cost of major repairs and accounts with description of the work of construction works). Income tax paid in France at the time of the transaction. The notary calculates the income tax and makes a payment to the tax office.

Inheritance tax in France

Before moving to the inheritance tax, it is necessary to understand the existing design methods tenure in France.

• Sole proprietorship
• Shared ownership (En tontine)
• Separate condominium (En indivision)

1. For sole proprietorship sole property registration only by the purchaser must plan in advance what he was going to do with it in the future: to sell, give, bequeath. Under French law, when you make a donation, there are limits on what amount of donation (in cash or property value) and over what period of time can be donated without paying taxes. Then, you must wait a certain period of time, before again it will be possible to donate the following amount without paying taxes. When making a Will the heirs are not exempt from paying inheritance tax in France. In the real estate owner will have to pay income tax.
2. Shared ownership (En tontine) When making a joint ownership of property, both spouses have equal rights to property. After the death of a spouse, all property rights go to the other spouse without paying taxes. It was only after the death of the spouse goes into real estate ownership to children born to this marriage. Children will have to pay inheritance tax in France on the difference between the value of real estate and settled by a certain contingent of minus this value. If there were children from his first marriage, not related by blood to the remaining parent co-owner, then they may have problems with the inheritance of property. The problem with joint ownership may also arise if the property owner lives in the common law, civil marriage. In this case, after the death of the property owner the remaining spouse will have to pay 60% tax on half the assessed value of real estate. If the original purchase transaction was framed not as a co-ownership, then later changed to a joint co-ownership would be impossible. If the spouses is a significant difference in age, the tax authorities may consider such a joint co-ownership null and void and will treat it as an act of donation, which should be taxed on the gift. So before you make a transaction, it is important to think of the consequences of this decision. We can offer you a full consultation on the issue of inheritance, as well as recommend you to experienced lawyers, if need be.
3. Separate condominium (En indivision) In the event of separation of ownership, each co-owner owns a percentage of real estate, which is calculated from the income of each spouse. Then, this percentage is specified in the contract for the sale of real estate (Compromis de Vente) and has remained unchanged for ever. If a couple want to have equal shares, then the spouse with more income lends money to the other spouse that he / she could make an equal share in the purchase of real estate. The problem with a separate contract may arise if one spouse wants to sell a property in France, and the other does not. Then the dispute resolved in court and may be delayed for a long time, up to 3 years. In contrast to the method of joint ownership of property, when you make a separation of ownership after the death of a spouse children from previous marriages, all get equal share of ownership. In this case, all children will have to pay inheritance tax in France on the difference between the value of real estate and settled by a certain contingent of minus this value.

Selecting the most optimal way to ownership, co-inheritance rights when you make a serious and important step in the process of purchase and sale of real estate in France, which can have tangible consequences in the future. We are ready to provide you with professional advice on all these issues before you make a final decision.