French Property Insider Volume XVII, Issue 16 Thursday, April 18, 2019 • Paris, France
Don't miss a single issue of French Property Insider! "Whitelist" French Property Insider by adding "email@example.com" to your address book.
Studio Apartment Fully Furnished, 28.55m2 (307 sq. ft.) Third Floor with Lift
36 rue de Buci Paris 6th Arrondissement
Located in the heart of Saint-Germain-des-Prés, where rue de Buci meets with boulevard Saint-Germain and rue de l’Echaudé, the apartment is in the perfect location on the third floor (with elevator) of an old building completely restored to modernity. It has two large windows overlooking the quiet rue de l’Echaudé.
Completely renovated in 2009, there is a bathroom with combined tub with a rainfall shower, sink and toilet. The kitchen has a refrigerator, two-burner ceramic stove, full sized oven, microwave and several other small appliances and is well equipped with dishes and glassware as well as utensils and cooking implements. The main area has a king-sized bed which can be converted to twins and surrounding the head of the bed is built in cabinetry. Included is an entertainment center with flat-screen TV and DVD player, a comfortable sofa and a table for two with plush Louis XV chairs.
The apartment is sold with all of the furnishings valued at 7,500€.
Transportation is abundant – with two Métro lines: Mabillon #10, Odeon and Saint-Germain-des-Prés #4 and #10; and numerous buses: #63, #70, #86, #87
When you're considering selling a property in France, if it is not your primary residence, then you can expect to pay a certain amount of Capital Gains Tax CGT). While no one I know wants to pay tax at all, CGT is based on the profits — the difference between the sale price and the purchase price or the declared value, when the property has been acquired by donation or inheritance, so how can one complain too much!? There are ways to lose, however, should you have "over capitalized" the property by investing more in renovation/decoration that can be justified against the market value of the property at the time of sale.
If you're considering selling a property, there are tools online provided by the Chambre de Notaires de Paris to estimate what you can expect to pay in capital gains. The following are excerpts from the Chambre de Notaire website with edits:
The capital gain is equal to the difference between the sale price, taking into account any costs to sell (agency commissions) and the amount of VAT paid (Value Added Tax), and the original purchase price (less the Notarial taxes and fees paid when buying the property) or the declared value when the property was received by gift or inheritance (also taking into account actual expenses and any inheritance rights if they were supported by the donee or heir).
The purchase price may have been increased by construction expenditures, reconstruction, expansion or improvement if they were supported by the vendor and built by a company in the supporting statement of reserves (invoices subject to VAT). Special note: materials and work done by the owner himself are not deductible! In all cases, the expenses of maintenance and repair, including major repairs, are not included among the expenses that can be taken into account for calculating the capital gain. They include those which correspond to work intended to maintain or restore a building in good condition and to allow normal use.
Alternatively, if the property has been owned for at least five years, the seller is allowed to decrease the gain by 15 percent as a simple option, with the assumption that some work/maintenance has been done within that time frame, without any justification. (It is advisable to maintain a dossier of invoices and receipts for all work done to a property should you wish to make a claim more than 15 percent.)
The tax is calculated as follows:
Therefore, the capital gain is exempt after 22 years of ownership on the gain and after 30 years of ownership for social contributions. Social contributions are highly controversial for non-French residents, who don't benefit form the social contributions. Since the De Ruyter legal case in 2015, social contributions are not applicable to tax payers who are not covered by the French “securité sociale,” but are affiliated to another health regime in another country of the EU or the EEA (including Iceland, Liechtenstein, Norway and Switzerland). In response to that, the French government found another way to replace the social contributions by a tax of 7.5%, making a total taxation on capital gains of 26.5%, as of 2019, instead of 36.2%. This new regime only applies for EU members and non-EU members will continue to pay the full tax rate of 36.2% (19% of CGT + 17.2% of social contributions). As Americans, we are still discriminated against as the social security tax would be assessed at the time of sale...but we would have the right to make a claim for a refund. (My guess is that claims would be futile — like trying to "fight city hall!")
The bottom line is whether your property has provided a return on investment. Any rental revenues received means that Other People's Money (what I call "OPM") have helped fund your investment. If at the time of purchase, you made improvements to the property at a rate, that when added to your cost of purchase, didn't exceed the current market value, then likely you will be paying a tax on the gain and happily so. One must also consider the value of the housing the property has provided. If you've owned a pied-à-terre in Paris, using it four weeks a year, and perhaps renting it the rest of the time, or periodically, then you have benefited from what those four weeks would have cost you renting another property or staying in a hotel.
If ownership in France is purely for investment reasons, I'd actually advise against it. There are lots of other ways and places of making real estate investments that will yield a higher return...but I doubt you'll have as much pleasure from them!...And that counts!
P.S. We just got his message from new Nice property-owner, Donna Kuker, sent to all our clients/friends in Nice with whom she celebrated in her new Niçois apartment before leaving town:
"Thanks all for celebrating my new FRENCH apartment! I still can’t believe it is real, it’s a dream that has come true! Hope to see you next month. Enjoy every minute of the French Riviera!"
Nothing makes my happier than to make someone else's dream come true! Let us help you realize yours. Contact us today!
May 14, 2019
Timothy Jay Smith, Author
Prior to becoming a full-time writer, Timothy Jay Smith had an unparalleled international career and life that saw him smuggle banned plays from behind the Iron Curtain, maneuver through Occupied Territories, and stowaway aboard a ‘devil’s barge’ for a three-day crossing from Cape Verde that landed him in an African jail.
He’s always willing to talk about how he selects and puts his stories together, as well as his own journey from self-publishing to being represented by a prominent New York agency which landed him a two-book deal with America’s fastest growing independent publisher.
Someone once remarked that Tim is so well traveled that he could fill a whole library with his stories. With the April 2019 release of his third novel, The Fourth Courier (Skyhorse Publishing), he’s on his way.
Don't miss it!
The second Tuesday of every month 3 p.m. to 5 p.m.
Copyright 2019 Adrian Leeds® Adrian Leeds Group® adrianleeds.com PAdrian Leeds® is a registered trademark in France. INPI: March 10, 2006, #063416238. Adrian Leeds Group® is a registered trademark in France. INPI: December 22, 2014, # 14/4144068. Anyone using these brand names or any kind of advertising without permission may be prosecuted. AdrianLeeds.com, AdrianLeedsGroup.com and AdrianLeedsEnterprises.com are reserved domains for exclusive use of Adrian Leeds® and Adrian Leeds Group®.