Champagne Tastes…Taxed

WEALTH TAX REFORMS TO ENCOURAGE FOREIGN INVESTMENT

President Emmanuel Macron Promised to abolish or change the Wealth Tax laws under the opinion that the current laws drive away foreign investment and sends French nationals fleeing to better tax havens. Of course, leftist opposition is calling him the “president of the rich.” Nonetheless, the draft of the PLF (projet de loi de finance, or FFA — the French Finance Act of 2018) — is in the works and will be voted on before year end, with the laws coming into effect as of January 1st. The National Assembly has already approved it, but the Senate now must give it’s accord.

The original wealth tax was introduced as long ago as the 1980s by the Socialists levied on individuals with assets above 1.3 million euros, including cars, yachts, precious metals, art and jewelry. The new tax for non-French residents will apply to non-commercial real estate owned, only, and therefore changes nothing for this type of resident. For residents, the tax will no longer apply to the other assets, which do not contribute to the “productive economy.”

The new tax is based on the market value of the real estate (with a 30% reduction for primary residences). Debts incurred in the acquisition of the property are allowed as deductions, such as construction and renovation. Mortgage debt must be linked to the property and substantiated for it to be deductible and interest-only loans would no longer be fully deductible. This applies to loans secured as of January 1, 2018. It gets further complicated by a limitation when the value of the asset is over €5 million and loan exceeds 60 per cent of the value. The amount over the limit would be deductible only at 50 per cent.

The new wealth tax will apply to the net value of the taxable assets which exceed the threshold €1,300,000 and the progressive rates remain unchanged:

Net taxable value                                  Rate

Up to €800,000                                     0
>From €800,001 to €1,300,000              0.50%
>From €1,300,001 to €2,570,000           0.70%
>From €2,570,001 to €5,000,000           1%
>From €5,000,001 to €10,000,000         1.25%
Above €10,000,000                               1.50%

Here’s a full explanation (in French).
You can also read the amendments (in French).

CHAMPAGNE PROBLEMS IN PARIS: OUR LATEST HOUSE HUNTERS INTERNATIONAL

Monday evening on U.S. time, our latest episode of House Hunters International aired on HGTV. The popular TV show is by Americans for Americans and features Americans living in Paris. In this episode, “Chef Krista went to France to become a sommelier and then decided to sell her California home and move to Paris permanently. With the market booming and home prices in Paris on the rise, Krista calls on her best friend, Stanley, to help her invest her life savings. She wants the cafe culture of central Paris with a big enough space to entertain. For better or worse, Stanley won’t let her settle, even if her small budget requires some concessions.”

For a short time, HGTV offers the episode free on its site, as long as you have a U.S. cable TV provider. They also post it on Youtube.com for public viewing for a limited time.

View it NOW! On their site or on Youtube.

HIGH REWARDS FOR LOW EXPECTATIONS

Read my latest article on ParisUpdate.com:

Who hasn’t dreamed of living in a romantic Paris apartment with tall windows, original molding, exposed beams and a fireplace with a big mirror above it and wooden beams? Behind all that charm, however, there are other factors that enraptured buyers should consider.

“Blessed is he who expects nothing, for he shall never be disappointed.” These words of wisdom from Alexander Pope apply to both apartment hunting and living in Paris.

Here are a few expectations those who dream of living in Paris should not entertain (unless, of course, they have an unlimited budget):

Lots of space

Space is at a premium and costs dearly in Paris. Parisians are accustomed to living in much smaller spaces than North Americans, so an apartment suitable for four people in Paris will be quite a bit smaller than a North American home for four.

Elevators

Apartment buildings that are over a hundred years old – and that covers most of central Paris – are unlikely to have elevators. If there is one, it may have been wedged into a tiny shaft and may not accommodate more than two or three people, much less lots of luggage! A description of an apartment that does not mention an “ascenseur” (elevator) likely doesn’t have one, so don’t expect 20th-century amenities in 17th-, 18th- or 19th-century Paris buildings.

Keep in mind that stairs can also be very narrow and steep. In Europe, the ground floor is zero and the next floors up are one, two, three, etc., so a second-floor apartment means two flights of stairs.

Older buildings usually have five or six floors. Since ceiling heights can vary, what really counts is the number of stairs and the height of the rise – it’s easier to walk up many low-rise stairs than fewer high-rise stairs.

Even if you find an elevator-equipped building, be forewarned that the elevators are often out of order, so if you can’t or don’t want to walk up stairs, choose an apartment on a lower floor or on a high floor in a building with two elevators (very rare).

Of course, one advantage of higher floors is more light in the apartment, particularly on narrow streets or in “courettes” (small courtyards).

“Fancy” plumbing

Modern bathroom facilities are not a given in older Paris buildings. If an apartment has a hot-water tank rather than a “chaudière” (gas-heated, for instant hot water), the tank may not be large enough to accommodate many long, hot showers with a modern rain-head shower.

Toilets are often separate from the bathroom proper, which will have a tub or shower and a sink (and maybe a bidet). Consider this an advantage, since more than one person can use the facilities at a time. The small toilet room may or may not have a small sink for hand-washing. A tub may have a hand-held shower, but no shower curtain or hook for the shower head. You have three choices: accept it, find a way to work around it or change it.

Don’t expect Paris to be like any other city you’ve ever lived in. You will encounter differences you never dreamed of or perhaps don’t even understand. But remember, no way is right or wrong, just different. If you leave your expectations behind, you won’t be disappointed and will fall in love with the City of Light, just as the rest of us have.

Note: This is the second in a series of articles to help readers find the Paris property that suits their needs best. Part I covered rentals lasting from one week to one year.

A bientôt,

Adrian Leeds
Adrian Leeds Group

(By Phil Mash)

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