Buying in Paris

MichelRichmont

Hi there,

I'm thinking of buying a buy-to-let apartment in Paris. I have never owned property before and have a decent salary in Dublin and savings of €25K.

The plan is to have is pay for itself as much as possible by renting through an agency.

Do any Irish banks have link ups with french banks? I know they do in terms of Spanish resort property, but this property would be a city apartment in Paris.

My reasoning is: Paris is unique, while prices will not go very high, they won't tumble as is likely in Ireland ; apartments are cheaper to begin with, and better quality. Since I do not want to buy in Ireland soon, I should use the 'lever' of my salary to make this investment.

Any thoughts?

Thanks

Victor

Be careful in Paris, many apartments are built for weekday living for people with country houses and are consequently quite small.

The_Conductor

There are also tax implications to owning property in France (in general) that you might not be familiar with.

Eg.

1. Rental income on your BTL apartment in France will be taxable in France, but as you are still an Irish Resident, it will also be taxable in Ireland. While we have reciprochal tax arrangements, whereby you won't be double taxed- you will have a legal obligation to lodge annual tax returns in both countries.

2. Interest on the loan for purchasing the Buy-To-Let apartment in France is not wholly deductable against rental income- unlike in Ireland. In France a flat rate deduction of 72% of all expenses, including mortgage interest, may be allowable, providing your rental income remains below certain levels.

3. Paris has its equivalent of the British council tax. As owner of the apartment you will be expected to pay 1. an annual tax on the apartment itself, and 2. an annual tax on the land its built on. This is irrespective of whether the apartment is let or vacant.

4. If you sell the property in under 5 years- you have to pay a straight 16% CGT tax to the French authorities. Every year after the 5 years is reduced by 10%- after 15 years there is no CGT to pay (in France!!!! You still have to pay CGT on your French holding to the Irish Revenue Commissioners).

5. Charges associated with the purchase of an apartment in Paris, normally come to about 10% of the purchase price.

In short- check out what exactly the implications are. France, Spain and Portugal are doing a big crackdown on foreign owned property in a bid to make the non-residents pay their fair share of taxes (note: their idea of fair share may not equate to your idea of what is fair!!!)

Check it out- get professional advice and only proceed when you are fully certain of what you are doing (and that it makes sense to you to do so).

Shane

Ponster

2. Interest on the loan for purchasing the Buy-To-Let apartment in France is not wholly deductable against rental income- unlike in Ireland. In France a flat rate deduction of 72% of all expenses, including mortgage interest, may be allowable, providing your rental income remains below certain levels.

3. Paris has its equivalent of the British council tax. As owner of the apartment you will be expected to pay 1. an annual tax on the apartment itself, and 2. an annual tax on the land its built on. This is irrespective of whether the apartment is let or vacant.
Shane

Point 2 may change soon if the *right* party wins todays elections.

The council tax in Paris is very low and is payable by whoever is living in the flat/house while the owner pays a "taxe foncière".


This page is very useful :

http://normandy.angloinfo.com/information.asp#16

My wife bought a 300sq feet 1 bedroomed place in Paris (75020) about 4 years ago for €80,000 (ground floor, private courtyard, built in 1933).
Since then 4 neighbors have packed up and sold out, selling for €125,000 in 2005 and the others from €155,000- €185,000 in 2006/2007

MichelRichmont

Thanks guys for your detailed responses. I'll post again if I go through with this project.

egan007

After reading 'A year in the Merde' and 'Merd Actually' I would be very VERY cautious about buying in france.
It's very different than here and expensive on the buyer. I would spend months researching any property and the system before thinking about it.

Ponster

egan007 wrote:

After reading 'A year in the Merde' and 'Merd Actually' I would be very VERY cautious about buying in france.

Ander after living here for 9 years I'd have to say that those books are mostly 'merde' themselves