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Selling your Real Estate Property


Selling your apartment

The real estate purchasing procedure in France
The first stage in purchasing real estate in France is to draft an official agreement between the seller and the buyer, known as a Compromis de Vente, before the notary. Both parties must sign this contract. The agreement specifies all terms of sale, including the price of the object and any possible credits. The real estate to be purchased is fixed after you sign the deal. The buyer pays a deposit of at least 10% of the total cost of the real estate to be purchased. The deposit is held on the notary's account until the transaction is completed. 


According to French law, the buyer can terminate the transaction only after 7 days of signing the Compromis de Vente, otherwise the deposit is forfeited. If the deal falls through due to circumstances beyond the buyer's control, the deposit is refunded.
The purchase of real estate in France is done through a notary. In France, the notary is the official representative of the state's interests. The Ministry of Justice firmly legalizes his/her conduct. The notary certifies that the transaction was completed in accordance with all legal requirements. Aside from financing transactions, mutual payments are processed through the notary bank account. The notary should attest to the transaction's legitimacy. These examinations take place approximately 2-3 months after the Compromis de Vente is signed. In the same way. The buyer should complete the purchase finance within the same time frame.
The seller and buyer sign the Final Contract or Acte de Vente in the presence of the notary at the next stage of the real estate acquisition legal registration. The buyer is required to pay the remaining portion of the real estate cost to the notary, who will then pay it to the seller. This cash should be placed at the disposal of the notary when the notary approves the readiness to sign. The notary ensures the certificate of sale and property passes to the new owner after the Acte de Vente is signed.

After securing the certificate of sale, the notary records the new property owner in a special register office for many days. The new owner must insure the property.

It should be noted that the buyer is responsible for additional costs such as property acquisition tax and registration (including the notary's fee), which typically account for around 7% of the total cost. On the date of the Acte de Vente, this money is paid to the notary.


Taxation of real estate in France

The owner of real estate pays real estate tax (taxe foncière). Its cost is variable and depends on the type of property and its location.

Habitation tax (taxe d'habitation) is paid by the resident, therefore if the real estate is rented for a short period of time, the lessee must pay this tax, but if it is utilized for the owners' habitation, the owners must pay. If the property is an apartment, you should budget between 1.000 and 2.000 € per year; if it is a villa, you should budget between 4.000 and 5.000 € per year.
Property tax (impôt de solidarité sur la fortune) is paid by natural people who have more than 750.000€ in capital in France (real estate and bank account). This tax is levied at a progressive rate ranging from 0.55 to 1.8% every year.

Profit resale tax (capital gains tax, la « plus-value ») is calculated on the difference between the resale price of the property after deducting the costs of purchase and completed works. If the property is resold within a year of the first sale, the tax is 33%, although it reduces year after year.

AUSTERITY PROGRAM: Reform on the capital  gains tax on property

One of the first measures of the austerity program concerning taxation of the capital gains on property has been voted by the Deputies on September 07, 2011.

As an example, let’s take a  real-estate property bought on August 14, 1996 as a buy-to-rent investment equivalent to 60 000 € and resold at 200 000 €.

Resold before February 01, 2012, total exemption from capital gains tax
Resold on February 02, 2012, taxable capital gains, with the allowances linked to  the period of ownership*,  will amount to 101 200 €. You will have to pay a tax of 32.5 %, i.e.  32 890 €.
This example shows that if you have to sell a property that is not you principal residence, it will have consequences for your assets.

To allow taking advantage of the current tax regime (total exemption after 15 years of ownership), the deadline date for a bill of sale has been fixed at February 01, 2012**. This restriction imposes, under consideration of time-to-market requirements, an immediate sale of property.

In Paradise Nice, we offer you a free of charge estimate to help you make a decision concerning  your property.

There is no allowance for the first five years of ownership, between 6 and 30 years of ownership there will be progressive exemption finally reaching zero after 30 years:
2% allowance per year between six and seventeen years of ownership (i.e. 20% allowance after 15 years of ownership)

4% allowance per year between eighteen and twenty-four years of ownership (i.e. 36% allowance after 20 years of ownership)

8% allowance per year starting from 25 years of ownership (i.e. 60% allowance after 25 years of ownership)

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