Talking Tax and Long-Term Leases

TALKING TAXES

The end of the year is nearing and here in France, everyone is scrambling to beat the December 21st deadline to finalize property transactions before the capital gains tax and notarial taxes escalate…once again. The current Hollande administration hasn’t yet understood the ill effects of over-taxation or the laws of supply and demand. Oh well, it ‘s unlikely the Socialists will gain power next time around, considering outcome of the recent regional elections.

In addition to over-taxation, the administrative aspects of completing a sale have gotten even heavier with the installation of the ALUR laws and therefore, transactions are taking even longer to finalize with a longer list of requirements to fulfill. Fortunately, the administrative aspects are just ‘hurdles’ to jump, and this ‘venting’ is not meant to discourage the would-be buyer, but only to warn and instill a level of patience. Nothing happens quickly or easily, but in the end, it does happen! With luck, those we have on the table to complete before the end of the year will have success.

France is not the only country to be tax-zealous. Eric M. Nemeth of Varnum Attorneys at Law published an article this week, titled, “Urgent: Address Your Tax Issues or Risk Losing Your Passport!“

Lose our passports for tax delinquency? This is scary business. If you’re delinquent over $50,000 (including penalties and interest), your passport can be revoked as part of the “FAST Act” or Fixing America’s Surface Transportation Act. If you never leave the U.S., then maybe you won’t care, but if you’re reading this, then likely you need and use your passport very much! And it applies to those of us living and working abroad, too.

Too many American residents of France think that their tax residency in another country removes them from responsibility to the U.S. for taxes and don’t even go to the trouble of filing tax returns. “Au contraire!” “If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.”

Losing your passport is not worth it, either.

SECURING A LONG-TERM RENTAL APARTMENT

Landlords in France have a tough time ensuring their tenants’ ability to pay the rent and therefore have a long list of requirements before a tenant can qualify to sign a lease for one year or more. The ALUR Law (Law for Access to Housing and Urban Development Renovated) — the very one mentioned above for having added more administrative aspects to real estate transactions — have set an exhaustive list of supporting documents the landlord can request from the tenant or his guarantor. No doubt, your landlord is going to know a whole lot about you — perhaps more than you are comfortable with, but without compliance, you may be homeless.

Expect the landlord to request:

*     Your ID or passport
*     Attestation of your professional activities
*     Attestation of your income including:
    –     Tax return
    –     Last three pay slips (if any)
    –     The last two balance sheets or, failing that, an income statement for the current year issued by an accountant for self-employed professions
    –     Proof of payment of compensation, retirement, pensions, social and family benefits and allowances received during the last three months or proof of entitlement, determined by the paying agency
    –     Scholarship award for scholarship students
    –     Title to your real estate or last notice of property tax
    –     Proof of property income, annuity or income from capital investments

Accordingly, the landlord may not request bank account statements!

Our team performs long-term apartment searches and assist in the provision of these documents in order to secure an apartment. It’s best to have the file ready-to-go so that when you are vying with another would-be tenant, your file is more desirable to the landlord! For more information, visit our Long-Term Rental Search page.

A bientôt,

Adrian Leeds
Editor, French Property Insider

Email: [email protected]

P.S. It’s not too early to begin planning your trip to Nice for Carnival. Mark your calendars now for February 12-28, 2016. Enjoy Carnival even more by staying in my own apartment Le Matisse. Hotels and apartments book several months in advance, so don’t wait until it’s too late. Make your reservation today!