buying property in France, French property, French property market, French property tax reform, French stamp duty, French stamp duty to rise, impact of rise in French stamp duty, second home in France
The government of President Francois Hollande is likely to implement a stamp duty rise in the 2014 “loi de Finance” (French Finance act draft for 2014 budget year).
French stamp duty amounts to 5.09% (see comment 1 at the end), to which is added the “notaire” fees, leading to an overall acquisition cost between 6 and 7% of the price of the property that you acquire.
The 5.09% stamp duty, “droits de mutation” in French, is broken down into 3 parts (well 2 main parts and a very tiny 3rd part, let’s make things simple!):
- 3.80% of tax for the French “department” where the property is located, (i.e. paid to “conseil general” of Haute-Savoie if you buy a property located in Chamonix), the French wording is “3.80% de droits d’enregistrement ou de publicité foncière”
- 1.20% of tax for the town hall where the property is located, named in plain French the “taxe additionnelle aux droits d’enregistrement”
- an additional 2.37% of the above 3.80% (a tiny 0.09% of the acquisition price)
The French governmemt intends to allow the “department” to increase their tax from 3.80% to 4.50%, leading to an overall stamp duty of 5.79%, so an additional cost of 0.70% when you buy a property in France.
However, during the first semester 2013, property prices have already decreased by 2.6% to 3.6% depending on the information source and national property network. This downward trend is likely to continue over the second half of 2013. Additionally, the new reform of capital gains tax (see the two previous blog for detailed information) may also increase – albeit to a limited extent – the number of property available on the market. So do not focus too much on this potential stamp duty rise, French market should continue to turn progressively to a market more favourable for buyers. We will come back soon to market environment and the potential impact of the current capital gains reform.
Comment 1. As nothing is really simple in France, the tax authorities have carved out a few exceptions to the 5.09% rate, the main being when you buy an “off plan” property (i.e. a flat or a house not yet built or in the process of being built, in French “achat sur plans” or “vente en état futur d’achèvement” or “V.E.F.A.), please read our post ““reduced” stamp duty on French property: in which case?”
This blog is animated by French Alps Property Search, www.alps-property-france.com, indepedent property finder in the Alps and other areas of France