Property for sale in France - Invest in Provence real estate � Apartments for sale in Paris
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Below are abbreviated answers to specialized legal issues that will be of interest
to some buyers. For a detailed discussion of each question as to how it relates
to your particular situation, we urge you to contact your Notaire. If you are a
client of JUST FRANCE SALES, please contact
us and we will propose a skilled English-speaking Notaire who is experienced in
dealing with clients from other countries.
- The importance of how the property is titled
- Inclusion of a mortgage contingency clause in the compromis de vente
- French inheritance law
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Some tax issues
The importance of how the property is titled
One vitally important issue the buyer's Notaire will explore in detail with the
client is how the property is to be titled.
Generally speaking, for married couples there are three principal ways to title
a property in France.
One is to title the property as the joint estate of a husband and wife. The laws
governing this kind of ownership generally track the community property laws common
to most states in the US.
Another is titling the property in the name of only one spouse. This may be useful
when the property is run principally as a rental business, or when a spouse wishes
to be protected from creditors of the other spouse. In order to title a property
in this manner the spouse purchasing the property may have to furnish evidence of
a pre-nuptial agreement.
The third way is to title the property is as a French corporation, or SCI (Socié té
Civile Immobilière). This form of ownership may be useful when there are
several owners, when the property is used principally for income purposes, or to
reduce inheritance taxes for heirs who are not related by blood.
The critical nature of deciding how the property should be titled illustrates once
again how important it is that prior to signing a compromis de vente the
buyer be advised by an English-speaking Notaire experienced in property purchases
by non-French citizens.
Inclusion of a mortgage contingency clause in the compromis de vente
The insertion of a mortgage contingency clause in a compromis de vente or
American Agreement of Sale stipulates that the sale is conditional on the buyer
being able to obtain a mortgage under the terms set forth in the agreement.
Regardless of how annoying a mortgage contingency clause may be to sellers and real
estate agents, a buyer has the right to insert such a clause into the compromis.
This clause protects the buyer from having to proceed in the event a mortgage application
is refused by lenders. Should financing be refused, the buyer furnishes the Notaire
with the lender's letter of denial, whereupon the 10 percent deposit is refunded
and the compromis declared null and void. This provision applies whether
or not the seven-day cooling-off period has expired.
French inheritance law
Contrary to certain principles that underlie Anglo-American inheritance law, French
law in this area does not permit an owner to construct legacies in any fashion he
or she conceives, no matter how bizarre or unfair. French law embraces a concept,
called "forced heirship," whereby certain family members are entitled under law
to receive a part of the deceased's estate. This right pertains to all estates except
those where the deceased has no children or living parents at the time of death.
The property owner who wishes to have the disposition of the estate conform as closely
as legally possible to his or her intentions should consult with the Notaire about
an appropriate will. The will will govern only the disposition of property in France.
Thus the American buyer may wish to have two wills, one covering property in the
US, and a French will governing disposition of the property owned in France. Each
will should specify that it applies only to property owned in the that country.
Some tax issues
Tax can vary between the very simple and the very complex according to the individual
owner's particular tax situation. Factors include the owner's tax bracket, whether
he or she is self-employed, amount of time spent at the property in France, etc.
These issues should be discussed directly with an English-speaking Notaire or French
lawyer experienced in advising non-French clients.
In brief, treaties which the United States and the United Kingdom have signed with
France provide that any rental income generated by a property in France must be
reported to the French government. The treaties have other provisions to avoid double
taxation. Accurate reporting of rental profits (or losses) to the owner's French
accountant is important to minimizing potentially unpleasant and time-consuming
encounters with French tax authorities later on.
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