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Bonapart approved by Association of International Property Professionals

Bonapart is proud to announce it's acceptance as a member of the Association of International Property Professionals AIPP and adherence to the AIPP's Code of Conduct.

In an effort to improve the professional standards of the international property market, Members of the AIPP have voluntarily committed themselves to industry regulation.

When you see that a company is a Member, it means:

The SRU Law: Solidarité et Renouvellement Urbain (solidarity and urban renewal)

By Samina Arnoult of Samina Arnoult Global Financial Services

Voted December 13, 2000,the SRU law has come into effect June 1, 2001. It extends the buyer’s protection.

This important text sets out nearly 200 articles and modifies no less than eight codes (the public health code, planning code, habitation and construction codes, general code of regional administrative units, rural code, general tax code, civil code and state code) with great ambition: to organize the development of French cities, towns and villages, based on habitat, planning and transportation.

A guide to buying a home in France

Expatica have published a short and useful guide to buying a property in France. I think they've summed it up rather well; ".....both daunting and tempting"! At least this is one thing we don't have to worry about in Paris:
"In the case of rural homes, this search should also determine if there are any other claims to the property, such as the neighbouring farmer's right, droit de passage, to drive his tractor across your land to his fields." Or worse, if you've read "A Year in the Merde" by Stephen Clarke you'll find out what happened when he bought an idyllic rural retreat.......

Using an "SCI" to purchase a property in France

A common way of buying a property in France is through the use of a Société Civile Immobilière, or SCI. The use of this method has benefits for French residents, as well as foreign residents.

An SCI is a property company. Although it can be used to minimise succession tax by gifting shares to your children during your lifetime, they are usually used by a group of unrelated people to purchase a property as co-owners. An SCI is meant to be non-trading. Taking professional advice is essential before deciding to go ahead and for the actual set up of the company.

When buying the property, the Promesse de Vente can be signed by one person and later the SCI can be substituted as the purchaser on the property. If you do decide to use an SCI, please be aware that your French bank account must be opened in the name of the SCI. It takes 4 to 6 weeks to create the company so don't wait too long before starting the administrative process. You can apply for the mortgage, if needed, as soon as you have draft bylaws of the SCI.

French system of Capital Gains Tax

Sam Okoshken is an American lawyer practicing in Paris and has given a few pointers on Capital Gains Tax;

"We anticipate some refreshing legislative policy changes under President Sarkozy’s initiative. However, the set of tax rules that will probably not change appreciably, as they have recently been revamped, are the capital gains rules affecting sales of French real estate.

What’s the rate?
Let’s start with the capital gains tax rate. What rate do you pay if you sell your French property? It depends on where you reside: the rate is 16% for residents of EU countries (except France ), 27% for residents of France (the sale of your principal residence in France is totally tax-free), and 33.33% for non-EU residents, such as US residents. Americans must also report the capital gain to the US, using US capital gains rules, but they can write off the French tax against the 15% US tax.

French Tax declaration for rental income - non-residents

If you own property here in France and derive rental income through it, it’s necessary to file a Tax Declaration for a non-resident. The law says to file, and it is especially necessary if the funds are deposited in his French bank account. If the property is financed, there would probably be no tax to pay. Interest and expenses are fully deductible.

Bonapart would strongly advise you to file and if you would like us to recommend a Tax specialist you can put your house in order with them now and avoid excess preparation time (and therefore fees) accumulating at a later stage.

Your mortgage acceptance as condition of the Promesse de Vente

In the Promesse de Vente we usually request that the purchase be subject to a conditional clause (“clause suspensive”) which lays out the minimum terms of a loan that you are willing to accept to purchase the property. Ordinarily you will have 45 days from the signing of the preliminary sales agreement to secure that financing. If you are unable to do so (in the preliminary sales agreement you obligate yourself to try) the agreement is automatically cancelled.

You are therefore excused from purchasing the property and your 10% deposit is refunded.

Not surprisingly, sellers are not too keen on this clause and it can be a bargaining mechanisim if it does not appear in the Promesse de Vente for example if you are buying but not financing the purchase with a loan, if you are financing with a mortgage obtained outside of France (which this rule does not cover) or you agree to drop the clause to obtain a better price in negotiations over the overall price of the property, which can be advantageous.

Legalities and checks galore

Part of the Notaire's job is to verify that the seller is really the owner of the property in question and any government mandates to take this building over by government control (only in rare cases when the building is considered to block some important government project see Droit de préemption).

Special laws require that the Notaire to verify the actual size of the apartment (Loi Carrez) via a Geometre's drawing, that the building's pipes and paint do not have lead in them and that there are no termites or asbestos in the building.

The Syndic (property management body elected by the co-owners group) will send the Notaire handling the sale a statement of the seller's account regarding the payment of fees and any work in progress but not yet completed (for which owners are liable). The vendor should obtain a Certificat de l'Article 20 stating that he doesn't owe any money to the copropriété; otherwise the Notaire must withhold payment to cover any fees due.

A new check that came in at the end of 2006 was the Pre-Sale Energy Efficiency Report which puts even more information at the buyer's disposal. Sometimes, France rocks!

Pre-Sale Efficiency Report - another diagnostic

Before a house may be sold, it is obligatory as of today, 1 November 2006, to have an energy diagnosis (diagnostic de performance énergétique).

The diagnoses - to be carried out by a professional - are in order to identify the estimated consumption of energy of a building on two criteria:

The consumption of energy: usage of electricity in running the house measured by kWh/m2 of primary energy

The impact of this consumption: greenhouse gas emissions measured in Kg of CO2/m2

The efficiency report assesses energy usage and and natural risks along with noting the presence of asbestos and lead. It includes technical recommendations for improving consumption.

More info from the official government advisory site.

Paris pooches

A French Vet will establish a health record booklet called a "livret International de santé" and update any shots necessary to French regulation. The good news is, France is NOT a quarantine country but you will need a current rabies vaccination dated within 5 days of your departure date. Also required is a health certificate from the departing country issued within 5 days of departure and both must be signed by a registered Vet. A pet's identification to be tattooed in it's ear.

Just remember to tuck your dog in a cute basket if you are travelling by Metro. Otherwise, they're interdit!