If you are looking into buying a property in the French alps and do not live in the country, you are probably unaware of the process you need to follow. Here we go into more detail to explain how you buy a ski property in France, covering everything from legal documentation to tax requirements.
Buying the property
The initial process is straightforward, in that you find the property you like, arrange a viewing and then put forward an offer via the agent if you would like to buy. If your offer is accepted and the sale process begins, you will also need to have a notary in place, who will act on behalf of the seller and buyer. As the buyer, you can use a separate notary for your side of the transaction, if that is your preference.
The notary will draw up a legal document called the “Compromis de Vente" which serves as the sale agreement between seller and buyer. If you live in France this can be done in the notary’s office, but if you live outside of the country the agreement will be sent to you to sign.
While the document is valid for several months, in most cases it is signed and returned within 7 days of an offer being accepted. Deposit requirements are usually between 5-10% of the property’s value and this is sent to the client via the notary.
It usually takes around 2-3 months for the notary to prepare the other documentation needed for the transaction. As with any property sale, the contract will include standard clauses that will allow it to be invalidated if certain conditions are not met, such as the buyer pulling out of the deal or if the required finance is not attained.
While there is no legal requirement to carry out a survey of the property, it is advisable to hire a professional surveyor to do this for you. By law, the buyer must be provided with certificates related to termites, asbestos and led, along with official measurements of the property.
Cooling off period
Once the Compromis de Vente has been sent to the buyer, there is a mandatory 10 day cooling off period. This is a legal requirement, and it gives the buyer the chance to withdraw from the transaction without facing any penalties.
This is the purchase deed and the last contract that needs to be signed by both the seller and buyer in the presence of the notary. If you are not in the France to sign the document, it can be done in your home country under certain conditions. This requires you to visit a local notary (not a solicitor) and the Foreign Office also need to validate documentation for UK buyers.
Like the exchange of contracts in the UK, this is the point where the transaction becomes legally binding. Once the Acte Authentique is signed, all outstanding funds must be transferred to the client via the notary and once received, the buyer receives the property deeds and becomes the registered property owner.
Legal fees and taxes
Legal fees can vary, but for new properties they generally tend to be around 3% of the purchase price, comprising of notary fees and taxes. Fees are higher for resale properties, costing approximately 7%, although if the seller wants to close the deal quickly, this can sometimes be lowered.
If you are buying a French Alps property with a friend or another family, you might want to consider doing so in the name of a French property holding company (known as an Société Civile Immobilière). While it won’t reduce the purchase price, you should be able to avoid paying any wealth tax charges, while inheritance tax commitments are reduced, and it is easier to change ownership at a later date, if needed.
Wealth tax can come into the equation, although where you live will influence the amount of tax you pay. If you live in France, then your worldwide assets are considered. Non-residents only pay tax on assets held within the country – so if you have a mortgage on the property this is deducted from the value of the assets. For shared properties the value is divided into the number of people who have legal ownership.
Rental income must be declared in personal tax returns every year – if you earn less than 75,000 Euros per annum you will be liable to pay 30% tax on the gross income. Capital gains tax also has to be paid if the property is sold at any point, although depending on the profit made from the transaction the percentage you will have to pay will vary based on the year and amount.
Two local property taxes to be aware of are "taxe d’habitation" and "taxe fonciere" (which are not due for the first 2 years in a new build). The costs vary for these taxes vary depending on the size of the property and the features included, such as a shared swimming pool, lift, caretaker and any grounds person that might be employed.