France Property Sales

Sete in Languedoc This development is featured in our Investments and Leasebacks section in the fastest growing region of France.

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The French government has introduced "Residence de Tourisme", or "Leaseback" plans to increase the quantity of holiday accommodation available in popular regions to provide accommodation for more tourists and to increase the tourist revenues for France.

The leaseback scheme in France enables people to buy their holiday home or an investment property in France and to finance most of the mortgage costs with a guaranteed rental income (typically yielding 3-7% of your initial investment) from a secure management company who then rent out your property for the period of the lease, typically 9 years.

The big advantage is that the French government give you back the VAT which is paid on the new development, this is currently 19.6% of the price. But do your sums correctly, if the selling price is 100,000 euro then the price on which the VAT was calculated is 83,600 euro. You will get back 16,400 euro which is 16.4% of the price you paid. In other words you get back about one sixth of the total VAT inclusive price not one fifth. In some cases the buying price you are quoted is with the tax already recovered by the contractor.

You are the freehold owner of the property and you can have use of the property for holidays for selected weeks of the year, this depends on each specific leaseback scheme. The property is purchased furnished and fitted with kitchen and bathroom. Your property is fully managed and serviced by a property company who lease from you and you have no further costs or charges for the period of the leaseback.

You own the freehold. Most leaseback plans give you the use for several weeks of the year and you receive a fixed rental income guaranteed for the rest of the year. The VAT tax incentive is a real discount off the market value of the property giving a VAT refund on the whole property from the French government. The current rate of VAT on all new property is 19.6%.(this refund represents a 16.4% discount of the market value normal selling price)

We give help and advice and study all leaseback and investment plans on offer. We make it clear that leasebacks are for a long term investment and not a way to get a free "holiday home" - here is a typical response to the hundreds of mails we get every week about leasebacks and investment property in France...

Dear Sir

I found your website very informative and am very interested in buying a small studio in the alps under the leaseback scheme. However, I would like to ask you a couple of questions. Does the leaseback scheme operate everywhere in France?

Does the leaseback scheme just apply to brand new properties?

Does it still apply if the apartment is a few years old?

Do all agents in France know about the leaseback scheme?

Most of the websites I have looked at just quote the purchase price of the property, does this mean I can claim the VAT back on the price?

Thank You for your advice, Anne

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Hello Anne

You should only consider a leaseback as a secure long term investment giving you a fair capital return and the potential of capital growth, not as a property purchase for your own use.

The French leaseback schemes are mostly for new developments or total refurbishment so as to qualify for the VAT refund of 19.6% (16.4% of the price including VAT).

The leaseback plans are mostly in popular tourist regions such as the Alps, South of France and Paris.

Leasebacks are investments in specified developments with a lease to a management company. These are not designed to be plans for a property you wish to use yourself although some do have a contract where you can use the property for several weeks each year. They are a freehold investment giving you a guaranteed capital return for a minimum of 9 years. At the end of the lease the property will still be designated as a tourism development and it then depends on the terms of the lease and the original contract as to the future use you have.

In some cases you may never have total access to your property, in others the plan can revert to you with no tax liabilities after 21 years.

Many agents do not seem to know the plans very well and do not understand them properly, it is best to talk to a specialist.

You cannot claim back any tax except when the plan is a designated leaseback investment and these are nearly always fully sold from the plans before construction is finished.

Hope this helps

best wishes

Tony