News from the Tax Man; Record High of Sales in Paris!

WHAT’S NEW FOR 2017 PROPERTY TAXES AND OTHER TAXES?

1) REDUCING THE LAG TIME

Currently, income tax is paid by the taxpayer with a one-year lag. E.g. Income tax paid in 2016 is based on income received in 2015.

From January 1st, 2018, this gap will no longer exist and the income tax will be deducted at the source — directly and monthly based on the salary by the employer, the pension fund or any other administration.

2) INCOME TAX REDUCTION

Homes with a taxable income below certain ceilings (18,500€ annually for a single person, double that for couples and increased by 3,700€ per half-share) can benefit from an tax reduction of 20%.

3) DECREASE IN CORPORATE TAX RATE

The law for 2017 gradually reduces the corporate rate to 28% in 2020 (currently the rate is 33.3%). This rate applies as of 2017 for small and medium businesses whose profits are between 38,120€ and 75,000€.

4) SOLIDARITY AGAINST FAMILIES OF VICTIMS OF TERRORISM

Families of victims of terrorist acts benefit from:

– a discharge for payment of the income tax payable by the victim on the date of his death,

– a residential tax rebate (including the contribution to public broadcasting) established in the name of the victim, in respect of the year of death, for the dwelling which constituted his principal residence.

These tax reductions apply to estates opened since January 1, 2015. They concern only the following families:

• victims of terrorism,

• soldiers deceased in foreign operations or security operations on French soil,

• firefighters, policemen and gendarmes, customs officers who died in the line of their duties and were cited at the order of the State.

5) SUPPRESSION OF CERTAIN FISCAL NICHES

The law of 2017 removes:

• the reduction of the rights of donation or succession when the heir, donor or trustee has three or more children on the day of the donation or at the disclosure of his rights to the estate (305€ or 610€)

• the tax credit for premiums paid in respect of insurance against unpaid rent,

• the possibility for owners to deduct from their overall income certain expenses of major repairs.

These deletions apply from January 1, 2017.

6) EXTENSION OF ENERGY TRANSITION TAX CREDIT (CITE)

In order to encourage households to take steps to improve the energy performance of their housing, the law for 2017:

• extends the application period of “CITE” by one year, i.e. until December 31, 2017,

• abolishes the eligibility requirement for CITE cumulation and zero-interest eco-loan (eco-PTZ, extended until December 31, 2018) retroactively from March 1, 2016.

7) EXTENSION OF TAX ADVANTAGES IN RESIDENTIAL REAL ESTATE INVESTMENT

The PINEL device

The tax system known as “Pinel” is a rental investment scheme allowing to deduct the tax portion of the purchase price of a dwelling, provided it is rented. There are several conditions to be met, including:

• purchase new or rehabilitated housing,

• in return for a commitment period of 6, 9 or 12 years, investors benefit from a tax reduction of 12%, 18% or 21% for an investment amount doubly capped at 300,000€ and 5,500€/m².

This scheme, originally planned for a period from September 1, 2014 to  December 31, 2016, is extended until December 31, 2017.

In addition, the Finance Act of 2017 extends this tax advantage between  January 1 and December 31, 2017 and under certain conditions to investments in certain communes in zone C.

The “CENSI-BOUVARD” device

Taxpayers who acquire new or rehabilitated housing in a student, elderly or handicapped residence of the EHPAD type benefit from a tax reduction of 11% of the price of the property with a ceiling of 300,000€. Rentals must be furnished and leases of business must be concluded between the owner and the operator of the residence for a minimum of 9 years.

This mechanism is extended until December 31, 2017.

8) CREATION OF TAX REDUCTION FOR TOURIST RESIDENCES

Tourist residences are no longer eligible for the “Censi-Bouvard” scheme. In return, the finance law for 2017 puts in place a new tax reduction.

It applies to certain works carried out on dwellings completed for at least 15 years that are part of:

– a classified tourism residence,

– or classified as furnished tourism, provided they are located in a condominium comprising a classified tourism residence.

Eligible works must be adopted by the general meeting of co-owners between 1 January 1, 2017 and December 31, 2019.

Examples of works: improvement of environmental performance, accessibility of people with disabilities, resurfacing.

(See the original text in French)

PRICES ARE GOING UP IN PARIS AND SALES ARE AT A RECORD HIGH!

Sales in the Ile-de-France are up 7% September through November 2016 over the same period in 2015. The number of transactions was 25% higher than the last 10 years and 12% higher than the period of high activity from 1999 to 2007. This increase in home sales is more pronounced in the Petite Couronne (+11%) than in the Grande Couronne (+5%) and in Paris (+4%). It is more marked for apartments (+8%) than for houses (+4%). The month of November 2016 turned out to be very active in terms of sales and as per the predications of the Paris notaries, the trend continued in December. Thanks to an upturn in sales more marked over the quarters, 2016 stands as a particularly active year, with a volume of
sales of resale homes that will exceed 10% over the year 2015.

This dynamism of the housing market produces the same effects as those already seen the last months with prices with an annual increase of 2.5% in the entire region in November* 2016. The progression of price decreases as you move away from the capital: +3.9% in Paris, +2.5% in Petite Couronne and +1.3% in Grande Couronnne. Rising annual Paris prices is more for apartments (+2.9%) than for homes (+1.7%).

After correction for seasonal variations, the price of housing increased by 0.7% in the region. The price of resale houses declined slightly over that period (-1.2% in 3 months). In Paris, the per square meter price of resale apartments stands at 8,340€ as of November 2016* (+3.9% in one year). Based on pre-sale agreements, the price per square meter could slightly exceed the historical record of August 2012 (8,460€) and reach 8,470€ in March 2017*, an increase of 5.7% over one year.

* Statistics are calculated on sales observed over 3 months (November corresponds to the period from September to November).

The point: buy now before prices rise and availability is greatly reduced!

To learn more, download the pdf (in French). 

A bientôt,

Adrian Leeds
The Adrian Leeds Group

 

Respond to Adrian: [email protected]

 

 

  

 

 

P.S. I’ll be in Los Angeles this month and offering personal two-hour consultations between February 20th and 24th. The cost is $330, but the fee applies toward our search services, so not a penny is lost! If you are thinking of making an investment in France, you are sure to find the time with me very valuable. To schedule your meeting with me, email me at [email protected]