Property Letter Sept 27th 2004

Dear All,

I have not written for a while for a couple of reasons. Although the summer has been busy for us, generally businesses on the Cote d’Azur almost close as key personnel head off on holiday making it hard to get much constructive work done. Secondly there is remarkably little on the market!

All agencies in Cannes are finding that it is very difficult to find interesting new properties for sale and properties that do come on the market are often priced too high for us. Anyone visiting Cannes now will find a conspicuous absence of “A Vendre” (For Sale) signs hanging from apartment railings. We are expecting a few more to come on to the market in the weeks and months ahead, based on the assu mption that people have been holding on to them for their own use or for rentals during the summer. But prices continue to creep upwards.

Property Taxes in France

The two principal taxes on residential property are collected by the State for the benefit of the local authorities

The main taxes are

taxe foncière

taxe d’habitation

These are specific to residential propety. Commercial property is a bit different, and wont be gone into here. These taxes are each assessed annually, and they vary in very substantialy. The commune rate of tax is often higher in main towns than in suburbs or small villages.

Taxe foncière is charged to the owner of residential property. The owner of the property on the first day of January is responsible for paying the tax for that year

Taxe d’habitation is also applicable residential property, but it is due from the occupant, not neccessarily the owner. The occupant on the first day of January is responsible for paying the tax for that year. If the tenant vacates the property the owner remains jointly liable

How they are Calculated:

Tax Fonciere:

The tax represents the notional annual rent if the property was let on the open market. However it is often substantially lower than the market rental value.

Every year, it is multiplied by a factor to reflect the national variation of prices. Periodically the tax authorities review the individual values of properties - the last overall review took place in 1974.
After relief for various allowances, the net base is multiplied by the current tax rates. A collection fee is added for the State.

Two different rates are applicable for developed and undeveloped land, about which more details are available on request, but the complexity is too great for the scope of this overview.

Taxe d’habitation

Also calculated by reference to the notional rental value of the premises

Discounts and allowances:

For taxe d’habitation there are allowances for the principal residence and for dependent persons. Discounts are granted for the disabled, aged and those on a low income. There are allowances against taxe foncière for new and reconstructed properties and for certain additions to existing properties

Payment

Those liable to pay taxe foncière or taxe d’habitation will be notified of the amount by an avis d’imposition which will state the amount due and the time for payment. They are usually received towards the end of August and September for payment by October 15 and November 15.There are penalties imposed for late payment.

Once can pay by monthly instalments.

If you sell

If the property is sold the seller and the buyer often agree to share the tax, by a clause inserted in the compromis de vente. This does not change the legal debtor of the tax, being the owner on January 1.

WHY FRANCE?

This week Iraq is under attack which seems incredible and unbelievable, especially as it plays out on our TV screens. However most important decisions are made under conditions of uncertainty, and they will inevitably cause us anxiety and concern. Our ability to act in spite of our fears will determine whether we succeed or fail.

WHY FRANCE?

Financial Mail – “If you really want to get out of rands and into property, go to Euroland. French property for instance, is going at bargain prices.”