Legalities for buying a property in the Languedoc

Law Languedoc

French legalities on purchasing your home in the Aude

There are many very good web sites that can give you all the legal jargon that you need on French tax laws. However, listed out below are some very important facts that you will need to know about before launching forth with your home purchase.

The purchase

• Once the offer has been made to the vendor and has been accepted, a “Compromis de Vente” (intended sale)or Sous Saint Privé will be drawn up and up to 10% deposit will be paid. The deposit is not mandatory, and can range from 0- 10% depending on discussions with Vendor/Agent.

It is also at this stage that you can add "Suspensive" Clauses. This in effect is legalising any promises that have been made by the Vendor - such as "The hole in the roof will be fixed by the time of signing the Acte Authentique "( Completion). Also, such a clause as "Completion will only be realised if the Vendor gets Planning permission for the terrace". This is legally binding, and avoids being gazumped!

You have a 7 day cooling off period from the date of signing the Compromis- during which time you can fully retract the sale. Thereafter, if you are unable to raise the Finance, or the Suspensive clauses have not been met, these are usually the ONLY reasons that you can pull out without penalty. A Completion date has to be set in the Compromis- usually 8-12 weeks after the Compromis has been signed.This date can be changed with agreement from the Vendor. 

• In the Notaire's office, the “Acte de Vente” or "Acte Authentique" is signed. At this point, the final amount of 90% or whatever sum remains from the deposit, is paid. Also, Government taxes and Notaire's fees need to be paid- roughly about 7-10 %.

French Government taxes

• Houses less than 5 years old, taxes are 2.5% of the purchase price (no Stamp Duty payable). 
• Houses more than 5 years old, taxes are between 7-10% of the purchase price.

Renting properties

Be aware that if you rent your property that is furnished, you will be taxed on running a commercial business. As a UK resident, you pay French income tax on the profits after deductions for repairs and in some cases, mortgage interest.

Selling French properties

If you sell your home as a non French resident, you are liable to French Capital Gains Tax. On the other hand, if you become a resident in France for a minimum of one tax year, gains on your main residence are exempt from tax.

Heirship

It is highly recommended making a Will through the Notaire when your home has been purchased as French law is very different to UK law. It is very complex and you will need to get good advice. Take a look at this link for French Wills
 
Social Services and charges.

Under retirement age, you may be required to contribute about 8% of your income to French National Insurance. This is higher than the UK but benefits are generally better. If you intend to run a small business (gite, B & B) expect to pay 20% of turnover in National Insurance contributions, and income tax rates can be very high too. There are ways to reduce this, and you will need to get advice. One idea is to plan to use a UK company for your business in France which can hugely reduce your liability, and in some cases this UK company will allow you to make up to £10 000 p.a. tax free.

Termite and lead inspection

Generally, surveys are not undertaken before exchange. However, if you require one, there are people who can undertake such activity ( see Classifieds). The most important action to take before exchanging money is to have an authorized inspector visit the property and report on termite infestation and the possible existence of lead and asbestos ( see Classifieds)
(Note: Propertyserviceslanguedoc.com and its representatives accept no responsibility for misinformation or incorrect advice. You are advised to get professional opinion on legal and financial matters.)

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