bonapartconsultingparis

Montmartre is moving!

A common problem with buildings in Montmartre is due to a curious phenomenon relating to carrieres (this means quarries).

The beautiful fin de siecle architecture scattered over the Butte and especially around Lamarck Caulincourt are on the hill where they originally got the stone for building Paris. The hill of Montmartre is just a thin veneer of rock over an underground quarry, a Swiss cheese of caverns and tunnels, and fortunes are spent pumping the caverns full of a mixture of concrete and clay. Initially the miners quarrymen left columns of stone to hold the whole thing up, but water has seeped in over the years, eroding away the columns, and surface subsidence has occurred.

Syndic : Le ras-le-bol des copropriétaires - go get 'em!

Consumer magazine (a bit like Which? but more aggressive - it needs to be, this is France), 60 Million de Consommateurs are featuring SYNDICS (co-owner association appointed management companies) as their bete-noire this month.

Excès tarifaires, comportements arrogants, contrats irréguliers... les copropriétaires se retrouvent trop souvent en position de faiblesse face à leur syndic. Il existe pourtant des moyens de se défendre et, au besoin, d'en trouver un meilleur.

Le palmarès des abus les plus scandaleux. Nos juristes ont décrypté cent contrats de syndics envoyés par nos lecteurs. Ils ont relevé des clauses abusives, des prestations indûment facturées ou des tarifs exorbitants dans 96 d'entre eux. Pauvres copropriétaires...

Sadly these are all too common complaints. One rarely hears of an owner who is happy with their Syndic, at least in Paris. This issue will apparently advise on how to find "une perle rare" - a good syndic....

Hopefully it will also priovide some help for one of our readers who wrote in recently.

The Annual general meeting of the property and... mice infestation

I read of an interesting problem recently on Jean Tacquet's "Survival Kit for Paris" newsletter that I am sure he won't mind if I share with you. It sums up the frustrating business of dealing with one's Syndic (the management group in charge of the running of the co-owned apartment buildings in Paris).

It's a Parisian pastime to moan about the Syndic and how inefficient, overpaid and downright corrupt they are. This particular problem is quite heartbreaking because the owners must have shelled out around 10,000 euros a m² and are now faced with the problem of some unwelcome visitors along with their short term rental guests. And no end in sight...

"We recently bought a nice apartment for very short-term rentals in a really premium location, facing the river and the Ile de la Cité. Everything went fine and business was good until the building, and especially the apartments facing the riverfront, got invaded with mice. The building manager was immediately informed of this and we have been told that the matter was being handled, but we have seen no changes in our apartment.

France’s top plumber is… English

I know tons of good (Polish, Russian, Czech, Croatian......) plumbers in Paris so I can't say I was surprised to read this in the great blog Frogsmoke.

"The French won’t like it when they find out that the plumber they’ve just named as the best in their country is from Manchester, UK.

President Nicolas Sarkozy will present the prestigious title Meilleur Apprenti de France - the Best Apprentice in France - to Oliver Watson, oblivious to the fact he doesn’t even live in France. Oliver, aged 26, beat 6,000 French plumbers to the honour.

He said: “They don’t know I’m English yet because all they have is my name, so when I’m shaking hands with Sarkozy I’m going to say: `I’m an English lad, you know’.“

After claiming France’s top plumbing honour, Oliver has moved back to Manchester."

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.

French property insurance

When you purchase your French property insurance, make sure that you read and understand the small print. This is where you can see the scope and restrictions of your coverage.

OWNER'S INSURANCE
Before you can buy a home in France, your Notaire will ask for proof that you have French property insurance. Before handing out the contract for your French home and closing the sale, the Notaire needs your French property insurance as an underwriting requirement.

Most French property insurance includes coverage for buildings. French property insurance covers the actual structure of a French home in case of damage due to fire or storms. French property insurance pays for the cost of repairs or rebuilding. Debris removal and professional fees following loss or damage are also covered by your French property insurance. Perils such as earthquake, fire, storm, flood, and burst pipes are all included. In addition, French property insurance companies include coverage for fixtures and fittings within the buildings like kitchens and baths.and include a natural catastrophe clause to cover losses caused by floods.

Aside from buildings, French property insurance also pays for the replacement of lost items or belongings caused by the same perils that damaged the house. The contents that are covered by your French property insurance include furniture, furnishings, televisions, personal belongings, etc.

WATER DAMAGE
When issued, your insurance papers will include a “constat amiable des dégâts des eaux” to be used in case of a water damage claim involving third parties as can be the case if you are living in an apartment. Signed by both parties and sent to their respective insurers, this document will help in a speedy settlement of the claim.

Ownership costs for a rental apartment

Although closing costs are quite high in France, (the Notaire will take 7-8%, most of which he or she is collecting for the government) but the property taxes and running costs of an apartment in Paris are not too bad.

For a one bedroom apartment of 50m² in central Paris they would be roughly equivalent to the following:

• Monthly building charges are paid quarterly
Dues range from 100 to 150 euros a month, depending on the size of the apartment, the number of apartments in the building and the services that the building has to offer: a Gardienne, an elevator etc. A good approximation is about 2 euros/square meter of the apartment.

• Once a year Tax Fonciere and Tax d'Habitation. For most US purchasers the 7-8% tax on a purchase seems high, annual property taxes in France are substantially lower than in the United States. Where US property is taxed by the state anywhere from 0.5% to 3% annually, the Taxe Fonciére (land tax) is about 0.1 to 0.2% per year. Tax d'Habitation varies from one place to another and according to the size of the property. (If you rent your property to someone else and they are living there on the first day of January for the year, they are liable to pay this tax.)

• Insurance which includes contents and damage by tenants (but not tenants belongings) about 300 euros per year.

• Internet/Cable/telephone package should be part of the rental package c.30-50 euros per month

• Electricity – is paid by tenant but you could consider wrapping it into the monthly rent (up to 50euros a month for example) to offer a nice "package deal" for your renters and gain a competitive advantage over other apartments on offer.

The Gardien/Gardienne

The Gardien/Gardienne is the lady or gentleman who lives in the loge (their ground floor apartment which comes with their job and allows them to survey the comings and goings) and takes care of cleaning common parts of your building, post and delivery of parcels. Many are of Portugese origin as this was the role they adapted to and became known for as tides of immigrants arrived in France after WWII. Mine is Mme Da Silva and she is really young and friendly.

Make no mistake, the are an important person to have on your side if you are a tenant or an owner. They generally know all the important information about your building, the inhabitants and the neighbourhood. Make yourself known to them and a little present now and again will make your life 100% easier.

Don't call them the "concierge", it's not very politically correct - I'm not sure exactly why and a real French person couldn't tell me either - and it's usage has died out.

I'm determined to start documenting the faithful Gardien/ne of Paris before they disappear. Most buildings are getting rid of them because they are expensive and it means the building charges are higher for the owners. This is a project I've been thinking about over the years and I'm going to ask my friend David Mccairley for help because he's a great photographer.

Here is a great post from Rue Rude about her "treasure".