A Bird’s Eye View of a Jewel in the City of Light
This View Could Be Yours
(FOR SUBSCRIBERS ONLY)
French Property Insider
Thursday. November 11, 2004
Bonjour French Property Insider Subscriber,
Armistice Day in France — a bank holiday and a perfect opportunity for the French to “faire le pont” — take Friday off to make for a long weekend. The weather here in Paris is cold and dismally damp, but in spite of it, this morning, those who died during the two world wars were remembered with a ceremony at the Arc de Triomphe during which President Jacques Chirac and others laid wreaths at the Tomb of the Unknown Soldier. At 9 p.m. this evening, an honor guard will stand vigil at the Arc, from which, as on other patriotic holidays, hangs a giant tricolor flag.
Next week’s issue will arrive a day early, as I’ll be flying westward to my home town of “Nouvelle Orléans” for a Thanksgiving holiday week with the family. The week after, on Thanksgiving Day, I’ll be “chowing down” on turkey and stuffing just like many of you, so expect French Property Insider to take a day off, too.
Back in Paris, Property Search Consultants Miranda Junowicz Bothe and Yolanda Robins will be working with FPI clients to find their dream French properties: one two-bedroom, two-bathroom apartment in the heart of Paris with air conditioning or at least, with the ability for installation of it. Not an easy task! The other project is a half-timbered house in Normandy suitable for a Bed and Breakfast — and that means lots of bedrooms and space for bathrooms “en suite.” Again, no easy task.
Today’s FPI highlights a very special find — a luxury penthouse apartment in the Marais that tops any apartment we’ve come across in a long time. It’s not on the market yet — meaning we have the inside scoop before the rest of Paris lays her eyes on it. For someone with a healthy budget and contemporary tastes, it’s a “jewel.” Be sure to scroll down and not miss this opportunity.
Thanks to a reader of Parler Paris, we discovered a Web site that brings the world to our computer screens — Keyhole — it streams the world over wired and wireless networks enabling users to virtually go anywhere on the planet and see places in photographic detail. This is not like any map you have ever seen. This is a 3D model of the real world, based on real satellite images combined with maps, guides to restaurants, hotels, entertainment, businesses and more. You can zoom from space to street level instantly and then pan or jump from place to place, city to city, even country to country. I’ve become addicted and found the rooftops of my Paris apartment, famous monuments and homes of family and friends. Try out the trial version!
On a more serious note, buyers beware of partnership purchases — and learn all you can about buying a property through and SCI (Société Civile Immobilière) as well as capital gains taxes that affect residents and non-residents differently. It’s all outlined below.
Properties for the week are some of Normandy’s best half-timbered bargains…great finds thanks to Yolanda Robins’ clever sleuthing and some big bargains on the auction block.
And on a final note — please take a moment to have a look at our new Web site home page and share your thoughts with us. Click here: http://adrianleeds.com/frenchproperty/insider
Editor, French Property Insider
P.S. For those of you seriously interested in owning a profitable property in France, pack your bags for our one-day Invest in France Seminar on December 29th here in Paris. It’s a great way to celebrate the New Year in France and learn how to make a profit on your investments! Visit http://www.adrianleeds.com/parlerparis/liveinfrance/IIF_Paris/IIF_home.html for more details and to register before it’s overbooked.
For a more comprehensive conference, plan to come to the capital of jazz and Creole cuisine, New Orleans, February 11 – 13, 2005 (just after Mardi Gras) for the Living and Investing in France Conference — three power-packed days covering all the ins and outs you need to make your dream to live and work in France come true. Details soon to be released, but to be put on a mailing list for more information, email email@example.com/parlerparis
Volume II, Issue 46, November 11, 2004
In this issue:
* Jewel in the Marais
* Keyholing Paris
* Don’t Let the French Inheritance and Capital Gains Tax Laws Ruin a Perfectly Good Friendship
* What is an SCI?
* French Capital Gains Tax Laws
* The Most Important Thing You Can Do Before the Year is Over
* Currency Exchange Update
* Hot Property: Normandy Dream Homes…and What’s Up for Auction
* Classified Advertising: Last Minute Apartment Rentals for the Holidays at a Big Bargain
Jewel in the Marais by Adrian Leeds
Jewels like this simply don’t come along every day. And when they do, they come to us like this — through a friend, not yet on the market, ready for a sale without an agency commission.
You are the first to have a look at this Marais penthouse…98 square meters (loi carrez — but more if you count the space under the eaves) on the 6th floor of an 18th-century building with a brand new lift. It is located in the very heart of the Marais, the 4th arrondissement, steps from the Hôtel de Ville, the Centre Georges Pompidou, the Seine and many of Paris’ finest museums.
You enter an unassuming old building through a beautiful centuries-old courtyard to take a lift to the 6th floor. Immediately you enter a beautiful curved foyer leading to an American style kitchen with bar and breakfast nook. Off the foyer is an office, laundry room and toilet, all of which have sensuous curved walls. Two large doorways lead from the kitchen to a spacious and luxurious double living room outfitted by the current owners with a dining room table for ten, comfortable leather seating plus enough space for a grand piano. The opposite wall houses the fireplace and practical custom-built cabinets floor to ceiling the entire length of the room. The room is totally wired for sound installation. A corridor leads to two bedrooms, one on each side, each with a full contemporary bath. The master bedroom has a large walk-in dressing room made entirely of wild cherry wood. The second bedroom has a separate entrance, perfect for guests.
The length of the apartment runs north to south with exposures east and west of the rooftops of Paris, the sky and a smashing view of the Centre Georges Pompidou just opposite it facing west. Facing east, you can see as far as the 20th arrondissement. As you can imagine, it is bathed in light both from the ten windows (double-paned) and the skylights throughout the apartment.
An architect redesigned the entire space using only the finest of quality materials — for security, there is a digicode, steel reinforced doors, burglar alarm and detection devices, fire alarms with 24-hour surveillance. In the kitchen, there is a top-of-the-line stainless steel cook-top by Leicht, Labrador granite counter tops and surfaces. Bathrooms are built to measure of glass and mirrors. A contemporary wood stove by Domenica Imbert adorns the double living room and adjacent is a wood depository. The 60 square meters of parquet flooring is of Merbau deep red-toned wood. Tiling in the kitchen is terra-cotta with black marble “cabochons.” There is virtually endless hot water thanks to a tank of 80 liters and gas heating throughout.
A studio apartment adjacent to each end, yet opposite the staircase, is potentially an addition (per negotiation with the owners) to the main apartment.
This is a rare find. And you are the first to find it.
Asking Price 885,000 Euros + 2% Finder’s Fee
If you are seriously interested in purchasing this apartment, contact us as soon as possible at firstname.lastname@example.org
By Stef Leinwohl in Sunny Blustery Chicago
Keyhole is a map system built on a database with trillions of bits of mapping data collected from satellites and airplanes. With Keyhole, you can fly like a superhero from your computer at home to a street corner somewhere else in the world — or find a local hospital, map a road trip or measure the distance between two points. Google purchased the company last month.Attached [pictured center] is an image I navigated to. You should know every street! I walk many two years ago at this same time. And oh how I miss the neighborhood. As you will notice it is from the trial version I have. I am not sure if the resolution is better if you subscribe. There are some other tricks you can try with the trial software like tilting the view so it is not straight down, but from an angle. Then you can move around like you are flying. I am sure you have some friends who will get an absolute blast with it.
Editor’s Note: I’ve added a few of my own finds…like my own apartment building! And the “Jewel in the Marais!” Thanks to Stef Leinwohl for this special view of Paris!
Don’t Let the French Inheritance and Capital Gains Tax Laws Ruin a Perfectly Good Friendship
By Adrian Leeds
Just last week, two friends bought an apartment together, sharing the costs 50-50 and in theory, sharing the potential profits 50-50. Together we were in the Notaire’s office, preparing an SCI (Société Civile Immobilière), a French corporation and a common way of buying a property in France which has tax benefits for French residents, as well as foreign residents.
This is a perfectly legitimate and reasonable way to plan for a fair business relationship between partners, however, I cautioned them. Close friends learned the hard way that when purchasing a property in a partnership with another person or persons, it is more important to strategically plan your EXIT than how you enter into the arrangement. During the brief time they owned their Paris apartment, one became a resident of France and the other didn’t. When they sold, the resident partner was not subject to capital gains taxes, but the other was — a whopping 33.3%. Because they did not foresee this issue, they did not previously agree to share in both the profits and losses, therefore one partner lost a large sum of profits to French tax.
Buyers beware…enter into your partnership with both eyes wide open.
What is an SCI?
An SCI is essentially a fully incorporated company with a registered office in France that can be the prope
rty itself. The SCI then owns the property and being a company, the SCI is itself owned by shareholders, in many cases, family members. The shareholders can be resident or non-resident in France.
In terms of inheritance, the use of an SCI overcomes some of the disadvantages that France’s Napoleonic laws entail. French law dictates that upon the death of the home’s owner, the property is divided up between the surviving spouse and any children. Using an SCI and its shareholder status means that the parents can appoint themselves as majority shareholders. They can make provision that upon the death of one or the other that his or her shares are passed onto the surviving spouse, therefore ensuring that the controlling share remains in the hands of the parent, and any decision regarding the property belongs to the partner of the deceased.
Where succession remains the issue, shares in a company are easier to distribute than immovable property, and so managing inheritance, and transferring the property, is simplified. The shareholder structure means that it is easier to divide up shares, rather than splitting the ownership of a property. In turn, this makes it easier for individuals with small budgets to pool their funds and buy a property that they would not be able to buy individually.
It is also easier to dispose of the shares without the aid of a notaire, thereby making the SCI more flexible than direct ownership. When using an SCI to buy a property, the net worth of the property can be reduced for tax purposes by way of debt. This can minimize French wealth tax and inheritance tax liability. Where foreign residents are concerned, the use of an SCI can be a great advantage for people whose home inheritance laws are more flexible than French laws.
Upon death, the applicable law is normally the one of the country where the property is located. However, if the property is owned through an SCI, then the applicable law will be the one of the last country of residence of the deceased. Owning a home in France via an SCI means that the French property becomes part of the estate of their country, as opposed to direct ownership of immovable property, which is subject to estate law in France. This is important to bear in mind in terms of inheritance. The terms of an SCI can be changed at any moment.
While there are numerous advantages of owning a property in France through an SCI, there are also a handful of drawbacks which should be considered. Using an SCI to purchase a property will incur additional expenses.
No matter what property is purchased, the future purchaser will have to pay purchaser’s fees to the notaire. On choosing to set up an SCI, one should equally make provision for the registration expenses as well as its running costs. The latter for example being the company’s annual accounts.
For an SCI to exist as a real company it must keep regular records, prepare annual accounts, hold an annual general meeting of the members to approve the accounts, maintain statutory records in a legal register.
If this is not carried out, the company can, under the civil code, be considered to be non-existent with the resultant tax consequences. It is important to understand that an SCI is a “moral person” and by not filing annual tax returns one can be assessed for a 3% tax on the market value of the property annually.
When furnished property owned by an SCI is rented out, it is considered a “location meublée.” The French tax authorities see this as a business activity (as it is owned by a company, the SCI) and the relevant corporation taxes are imposed. This becomes complicated when the owner of the SCI wishes to cease the rental activity. This is viewed as a change in activity and thus generates an automatic capital gain taxation to which the relative corporate taxes are imposed.
Wealth tax is due on the net value of the shares of the SCI; that means the value of the property, less debt. This even applies to non-residents. Assets are cumulated for wealth tax purposes. (This is not always clearly explained to foreigners.) French case law emphasizes that it is vitally important that records be maintained.
French Capital Gains Tax Laws
La Loi de Finance du 1er Janvier 2004
Law Effective January 2004
Exemption of Capital Gain Tax:
Amongst others, the following exemptions from CGT are specified:
1. Main residence of the owner on the day of sale.
2. The dwelling in France of physical persons who are not French resident but who are European Union citizens, with a limit of one residence per tax payer and under the condition that they have been fiscally domiciled in France in a continuous way for at least two years at any time prior to the sale;
3. The adjoining and necessary outbuildings of properties mentioned in the above two paragraphs provided that they are sold at the same time as those properties;
4. When the sale price is less or equal to 15,000 Euros.
5. In the case of expropriation generating a capital gain. In this case, if the sale is followed by a purchase in property within 12 months, there will be exemption.
Expenditure That Can Be Offset:
Construction, reconstruction, extension, renovation or improvement works which are borne by the vendor and undertaken by a company from the time of completion of construction of the property or its purchase if later, provided that the cost has not been offset for income tax purposes and it is not rental expenditure (e.g. works such as simple redecoration). When the tax payer sells a property five years after purchase and is not able to provide proof of the expenditure, the original purchase price is increased by an amount equal to 15% thereof (to represent the cost of the works).
For each year of ownership beyond the first five years since purchase, the capital gain is reduced by 10%. This means that upon fifteen years of ownership, the reduction is 100% and there is
– no CGT to pay.
– Tax free allowance
For any sale, there is a tax free allowance of 1,000 Euros.
Time of Payment:
The tax has to be paid at the time of sale and will be taken from the sale’s proceeds (the system that already applied to non-residents). The tax return is made at this time and no longer forms part of the annual income tax return.
* 26 % for the French Residents
* 16 % for the residents of an EU country (except France!)
* 33,33 % for the residents outside of the EU
Example on how to calculate the capital gain tax :
For an apartment bought in 1995:
Price of purchase 100,000 euros + 9,000 notary fees.
Works were done for a veranda in 2000: paid 17,000 euros.
Resale in 2004 for 200,000 euros 6% of which are agency commission.
Net sale: 200,000 – 12,000 = 188,000 (price less agency commission)
Purchase cost: 100,000
– 126,000 = 62,000 (gross capital gain)
62,000 – 40% (10% reduction per year after 5 years) = 37,200
37,200 – 1,000 (tax free band) = 36,200
36,200 x 16% = 5,792 TO PAY for a non-resident
36,200 x 26% = 9,412 TO PAY for a resident
The Most Important Thing You Can Do Before the Year is Over
Learn the best ways to watch your money and real estate investment grow before your very eyes…all while gazing at the world’s most famous monument over a frothy café crème.
Now’s your opportunity to take a holiday vacation in the most romantic and beautiful city in the world and set aside JUST ONE DAY of your busy schedule visiting museums and dining on foie gras to learn how to make your money double (and even triple — like mine has since I bought my Marais apartment just four short years ago).
December 29th, the first 100 individuals to register will learn from some of the finest experts in French real estate…how to make the most of the rest of their lives while building a portfolio of some of the most desirable real estate in the world.
Take just one full power-packed day, this coming December 29th — in Paris, France. Learn how…
SEEKING A MORTGAGE IN FRANCE?
Let us help you secure a mortgage in France with interest rates as low as 3.35%.
Visit http://www.adrianleeds.com/frenchproperty/loan for more information
TODAY’S CURRENCY UPDATE
1 U.S. Dollar equals 0.776069 Euros (0.777722 Euros last week)
1 Euros equals 1.28855 U.S. Dollars (1.28581 Dollars last week)
1 U.K. Pound equals 1.43329 Euros (1.43732 Euros last week)
1 Euro equals 0.697696 U.K. Pounds (0.6957371 Pounds last week)
FOR SALE: FPI HOT PROPERTY OF THE WEEK
Each week French Property Insider features a range of properties which we believe are on the market at the time of writing. These properties are featured in order to give readers a sample of what is currently available and a working example of prices being asked in various regions of France and districts of Paris.
As we are not a real estate agency, these properties do not constitute a sales listing. For those readers seriously interested in finding property in Paris or France, you can retain our services to do the whole thing for you. For more information, visit http://www.adrianleeds.com/frenchproperty/insider/propertyconsultation.html
More Normandy Dream Homes…
*** Department 14 BAYEUX 8 Rooms – 170m²
Bayeux west, generous space with large outbuildings, lots of land, 6 bedrooms, lots 2383 square meters.
Asking Price: 258,415 Euros + 2% Finder’s Fee
*** Department 27 BERNAY 6 Rooms – 220m²
Apple press entry, salon with fireplace, American kitchen, 4 bedrooms, dressing room, 2 offices, three bedrooms, attic, cellar, outbuildings.
Asking Price: 298,920 Euros + 2% Finder’s Fee
*** Department 14 ST PIERRE SUR DIVES 6 Rooms – 175m²
Pays d’Auge, half-timbered house from the 16th-century, 6 principal rooms, 3 bedrooms, wooded land of 1300 m2, garage, very quiet.
Asking Price: 238,370 Euros + 2% Finder’s Fee
*** Paris Auctions
November 16, 23 and 30, 2004
Notaires de Paris
Place du Châtelet
12 avenue Victoria
Additional information on Les Ventes aux Enchères des Notaires can be
found on the website at http://www.encheres-Paris.com/
Though the site has a button for an English version, it isn’t reliable
To read Schuyler Hoffman’s article about the property auctions in
Paris, click on:
Starting Bid: 1,133,000 Euros
3 Rooms 92,5 m² + parking [+]
7 rue Franco-Russe – 75007 – PARIS 7th
November 30th Session
Starting Bid: 458,800 Euros
Studio 31,3 m² [+]
16 rue du Faubourg du Temple – 75011 – PARIS 11th
November 30th Session
Starting Bid: 138,000 Euros
3 Rooms 43,4 m² [+]
62/74 boulevard Garibaldi – 75015 – PARIS 15th
November 23rd Session
4 Rooms 60,2 m² [+]
62/74 boulevard Garibaldi – 75015 – PARIS 15th
November 23rd Session
Starting Bid: 193,000 Euros
Studio 37,4 m² [+]
16 rue du Faubourg du Temple – 75011 – PARIS 11th
November 16th Session
Starting Bid: 90,000 Euros
Studio 21,34 m² [+]
42 rue de Miromesnil – 75008 – PARIS 8th
November 16th Session
Starting Bid: 60,000 Euros
2 Rooms 49,56 m² [+]
235 rue de Bercy – 75012 – PARIS 12th
November 16th Session
PARLER PARIS APRES MIDI
EVERY SECOND TUESDAY OF THE MONTH, 3 p.m. to 5 p.m.
NEXT MEETING: Tuesday, November 9th, 2004
This is your opportunity to meet every month, often with local professionals who can answer your Working and Living in France questions. You are invited to come for drinks and share your questions and comments about what it takes to create a life here, own property and enjoy what France has to offer. It is also an opportunity to network with other Parler Paris readers.
Upstairs at La Pierre du Marais
96, rue des Archives at the corner of rue de Bretagne, 75003 Paris
Mtro Lines 9, 3 et 11, stations Temple, Rpublique or Arts et Mtiers
For a detail description of the past meeting and for more information
about Parler Paris Aprs Midi, visit:
Don’t forget that with your FPI subscription you are entitled to a discount on the purchase of any Insider Paris Guides. You’ll find details of the guides at http://www.insiderparisguides.com/. When ordering, a box will pop up allowing you to enter the following username/password
Order more than one guide at a time and you will receive an additional discount!
RENTING AN APARTMENT IN PARIS OR HAVE AN APARTMENT TO RENT?
If you are seeking to rent a furnished apartment for a week, a month or a year or
you have an apartment you wish to rent, visit http://www.adrianleeds.com/parlerparis/apartments
THINGS YOU NEED TO KNOW
- To access this password protected page:
The username is: fpisubscriber
The password is: paris1001
If your computer utilizes cookies, once you log into a subscriber only section, the login information will remain active for seven days, after which you will have to login again.
- Past issues of FPI are available on the website. You will find the “Past Issues”link on the left under “Subscribers Only”or by going to http://www.adrianleeds.com/frenchproperty/insider/subscribersonly/pastissues/index.html
- To receive your free French Leaseback Report or the Paris Property Report, click on
Located in a 17th century Le Marais Hotel Particulier, this 70 square meter apartment two-bedroom apartment with lots of light is nicely furnished and is perfect for a single woman in the freshly renovated guest room when owner Adrian Leeds is in or for up to 4 people when she’s traveling.
Pictures and more details available here: http://www.adrianleeds.com/parlerparis/apartments/rentals/leeds.html
For all short term rental apartments in Paris, take a look at http://www.adrianleeds.com/parlerparis/apartments or http://www.adrianleeds.com/frenchproperty/insider/longterm.html for long term apartments.
For rent by the week or longer
Two lovely 2 or 3-bedroom apartments — 1st arrondissement, same building. Just minutes away: the Louvre, Tuilleries, Place Vendome and more. French style gives you a true taste of Paris. Fully equipped makes your Paris stay effortless, comfortable and memorable.
Complete information at http://www.youlloveparis.com
HELPFUL CONVERSIONS FOR REAL ESTATE
1 square meter = 10.7639104 square feet
1 hectare = 2.4710538 acres
For more conversions, refer to: http://www.onlineconversion.com/
SUBSCRIBE TO PARLER PARIS
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Copyright 2004, Adrian Leeds Group, LLC