Usufruit Propriete Nue Property and Buy to Let Investment Opportunities in France

|| About Non Leaseback French Buy to Lets || Non Leaseback French Buy to Let Listings|| Buy to let Finance ||French Leases || Leaseback Facts || Leaseback Enquiry Form || Leaseback Listings || Leaseback Finance || Choosing a Leaseback Development || Filing French Tax Returns and TVA Formalities after Leaseback Purchase || Leaseback Re-sales

With the proliferation of leaseback properties and offers, people often forget that there are other forms of property investment available in France. There is the traditional buy to let, for those seeking income + capital growth, and there is usufruit / propriete nue property investments for those seeking maximum capital growth opportunities.

For simple and straight forward capital growth opportunities we can offer properties on a freehold basis where the use -usuifruit- has been sold seperately, this is not to be confused with a leasehold/ freehold situation, there is no lease.. Hence you can buy a property at 50% -65% of its present market value and, at the end of the 'usufruit' period (16 years), regain posession at no cost. All charges and property taxes on these properties are borne by the owner of the usufruite during the duration of the 'usufruit', hence no costs after the original investment, return of the property in good condition, no hassles with management firms or tenants, and as 16 years will have expired no French capital gains tax to pay. You pay 50%- 65% of the value but benefit from property inflation working on 100% of the value. Interest only and repayment mortgages available.

As an example, take a house with market value of 100,000 euros,

° Cost buying it on the 'Propriete Nue' principle 50,000 euros

° Newbuild, hence legal fees of 2%-3% ............ 1,500 euros

° Total Cost 51,500 euros

Possible gains over 16 year period

° Assuming a low figure of 5% ( I will update this calculation with a 0% and a 2% figure for price inflation) annual property price inflation (according to INSEE, the French state statistics office, prices in the region we have developments rose by 65% over a six year period to 2004)

° 5% annual gain on 100,000 over 16 years = 118,287

° Total Value of Investment after 16 years 218,287 euros

° Total profit on investment 166,787 euros which represents 9.5% p/a compound interest on the full original investment. There is no French capital gains tax payable on this profit.

We have at present seven usufruit propriete nue developments to offer, a Hyeres coastal seaview Provence development, luxury Provence development in Saint Maximin, Toulouse apartments, Grenoble, Lyon, Nancy; St Germain en Laye and Levallois (both near Paris) and another at Audenge on the coast in the Aquitaine. Please mail rob@frenchpropertyco.com for all enquiries. Only a few properties left.

We are also building up listings of new build developments in areas of strong local rental demand. These properties can be bought and lived in or let out. These are not leaseback schemes. The properties we are featuring as Buy to Lets all have on hand offers from established rental management firms to deal with rentals for the owners.

Unlike leaseback, the legal papers signed with these firms are contracts and not leases, hence there is no 'propriete commerciale' and no problem having an unencumbered and empty property at the end of a contract to sell or live in.

Unlike leasebacks there is no TVA clawback, but this is easily outweighed by the potential for capital growth. rents shown are the starting rents/returns available, obviously these increase in line with the market.

We are listing also schemes where the rentals are done in accordance with the French de obien laws, which puts cielings on the annual return/rent but also offers many tax advantages.

Because these buy to lets are in France, it would be difficult for a non French national to be a hands on landlord. Therefore a good 'gestionnaire', rental management firm, is needed.

We have developments offering new build houses and apartments through out France with good 'gestionnaires' in place. The owner of the property takes out a 1 year, 2 year or three year tacitly renewable contract with the gestionnaire, who: for a % of the annual rents, handles all the rentals. Most of the developments we propose come with bad tenant insurance, meaning that if a tenant does not pay rent you are still paid and the insurance covers eviction, damage, empty periods betwen tenants etc. Thus, typically for about 10% of the annual rents you have a safe return and a simple 'no hands' investment. Unlike leasebacks, there is no commercial lease and hence no 'propriete commerciale' and all the exit problems that can cause.

At the end of any given contract (neccessary notice having been given etc) you have an empty and unencumbered property that can be sold at the full market value or occupied full time by the owner. Visit our page on French leases fior full details

The developments we offer are either classical 'buy to lets' with full market rents being charged, or rented out on a 'de Robien' basis. We have about 30 different schemes which we like, design, region, prices, developers, management companies all add up. Mail me at rob@frenchpropertyco.com if you want details of developments in any specific regions or specific price rangesl

Classical French buy to lets work as follows in France:-

The buyer:
# Buys a new /house/apartment
# Rents out this property unfurnished.
# Makes a French tax declaration of his rental income as 'revenus fonciers'.

In Exchange the French Tax Offices:
# Make the first 14% of rental income tax free
# Allow a deduction from the taxable revenue

for any costs other than those of management and insurance.
Cleaning costs, management fees, payment of guardians or concierges, premiums for insurance against unpaid rents.
Interest payments on loans used for the property purchase.

And Also....

When the total of these charges are higher than the total of rents rec'd, the property owner has a 'deficit foncier' (loss on property) This deficit can be offset against other income rec'd in France to a limit of 10 700 Euros par an. The part of the deficit which is greater than 10 700 Euros or any loan interest payments that are greater than rental income can be put forward to be set against tax in the years that follow..

Buy in a new suburb, rent your property out for 15 years then sell on at any stage at the full market value.with 0 capital gains payable in France. The new suburb will have matured, trees and plants, small shops sucked in etc.

The 'de Robien' law was brought in in France to deal with the shortage of rental property in many regions of France. While they offer additional advantages to those who declare high incomes in France, they are still attractive and safe investments for those that live abroad. The follwing tax incentives are offered by the French government :-

The buyer has to:
# Buy new build, house or apartment.
#Rent out the property unfurnished for a minimum of 9 years, to a tenant (not neccessarily nine years to the same tenant) who occupies the property as his main home.
# Charge rents which are equal or below certain rent ceilings set by the French government and which are revised each year in line with the INSEE new construction index.

Rates at the moment are as follows:-

Zone A (Paris, Ile de France,, Cote d'Azur, French Geneva) 19,19/m²
Zone B (Towns with more than 50.000 inhabitants, expensive areas on the finges of greater Paris, border and coastal zones 13,33/m²
Zone C (rest of France) 9,59m²

# Makes a French tax declaration of his rental income as 'revenus fonciers'.


In Exchange the French Tax Offices: :
#To offset up to 65% of the cost of the property against taxable revenue over the following 15 years
# To benefit from a fixed allowance of 6% to cover management and insurance costs.
# To deduct from taxable revenue the costs of any works carried out on the building during the rental period.

And hence to pay less taxes..............:
# Each year the property owner can make the following deductions from his declared rental income. de ses revenus fonciers les charges suivantes : setting the purchase price etc against income at the rate of: 8%pa the first 5 years, 2,5%pa the following 4 years.
# Allow a deduction from the taxable revenue

for any costs other than those of management and insurance.
Cleaning costs, payment of guardians or concierges, premiums for insurance against unpaid rents.
Interest payments on loans used for the property purchase.
fixed 6% management allowance.

And Also....

When the total of these charges are higher than the total of rents rec'd, the property owner has a 'deficit foncier' (loss on property) This deficit can be offset against other income rec'd in France to a limit of 10 700 Euros par an. The part of the deficit which is greater than 10 700 Euros or any loan interest payments that aregreater than rental income can be put forward to be set against tax in the ten years that follow..

If we look at the INSEE French government predictions for housing demand over the next fifteen years the reason for all the different tax incentives for provision of shorterm, long term and special needs (student, retirement, with medical provision etc) accommodation becomes very clear.

French Government Prediction of No of Households in France in Thousands 1999 - 2030
1999 2010 2020 2030
23 776.1
26 295.4
28 005.6
29 522.3

Click here for a regional breakdown (Languedoc leads the way as usual...)

|| Non Leaseback French Buy to Lets ||

Couple that with the fact that France has this year declared that the number of unoccupied houses has shrunk to an all time low, and the need for new build becomes obvious.

.

French property:
Join our newsletter:
Contact information:
Email: rob@southernfrance.com
Telephone: Fr 0467 24 53 59
Fax: FR 0826421562

www.moving-to-france.com