No. 1 Pitfall - thinking of it as an investment.pitfalls of such an investment
Have a number of friends who bought in France Spain and Turkey over the years. They have all sold at different times. Common thread if you are not going to live there its not a good idea because it restricts you. You feel that you have to return to the same spot even though you do not.We are currently reviewing our financial position and could have access to some cash.
We have close links with France an thinking about buying an apartment there (120 to 140k no mortgage).
The goal would be to spend 6/7 weeks a year there now and more when older (and no kids around).
We know where we would be buying, we know the region very well and this is not a concern.
It would not be for rental though we might consider renting for 4 to 6 weeks during the pick season to cover some costs.
While we always considered such an investment to be a potential in the future, we think that perhaps now could be a good time.
We are aware of the local taxes and costs.
What could be the pitfalls of such an investment?
Thank you. Any difficulty with the buying process itself?Hi
Some tips from me. In no particular order.
1 Avoid leaseback or any scheme that guarantees rent like the plague
2 You will have to pay two french taxes annually Fonciere and habitation. Always ask what these are if looking at a particular property. They vary wildly between different towns and villages. Taxe habitation has been abolished for full time residents but not for foreigners.
3 if renting out say on Airbnb you will probably need a french accountant to do your annual return. There are different ‘regimes’ I.e. LNMP where you can write off a lot of tax in France but you will also need to declare the income in Ireland and May pay tax there. Accountants charge €300 to €500 PA. You will need a local to greet guests and do the cleaning and be on standby during their stay for stuff like blocked showers or broken bits and pieces I.e. bulbs.
This will cost at least €75 - €100 per letting depending on where the property is. Finding someone reliable that you can trust with your guests is not easy. If you pay someone who does this as their business you can claim it back as an expensive. If you do it ‘on the black’ then obviously not.
4. A french bank account is essential for paying utilities. These can be tricky to open but it can be done.
5. Internet will cost €30-€40 per month. Electricity will depend on usage of course and is relatively cheap compared to Ireland. You also pay for water and it is not cheap. Especially if you have a pool
6 if you buy in a complex you will have the coproprietaire charges These vary wildly from €1000 a year to the sky is the limit. A shared pool or lifts will add to this. Sometimes this includes water.
7. Make sure you have clearly defined parking spot(s) with any property you purchase. Locals tend to park where they like and this is tricky of welcoming guests
8. A local french mobile number is very handy with nearly everything moving to two factor authentication.
9.IKEA and many others do home delivery which is very handy.
10. Many locations in france have strict rules around short term letting ie Paris Nice Cannes limit how many nights per year etc. you always have to register anywhere you are letting with the authorities. AIRBNB share everything with french tax authorities. French tax share a lot with Irish tax.
That’s all I can think of for now.
Joebloggs
A sensible decision I think. Best of luck.So an overwhelming no. Thought so ourselves. As I said, we have family there which would explain our possible choice. But still probably not enough to persuade us. We would not retire there at least I don't think so. We will probably take the opportunity to spend more time there in the future but might keep it to renting.
Buy-in costs, if you go through the traditional route i.e. immobillier, as purchaser, expect to pay between 6-8% on top of purchase price. Notaire fees, which are essentially government duties add an additional 6%, so budget between 10-15% of the purchase price for purchase fees. These do not cover structural surveys, which if purchasing a standalone property are an absolute must. Depending on region, where soil is "clay rich", then droughts cause soil contraction, and heavy rains result in ground swell which effectively causes the ground to heave which causes cracks in the property to open and close. This can adversely impact concrete lined swimming pools (which are expensive to drain and re-fill).So an overwhelming no. Thought so ourselves. As I said, we have family there which would explain our possible choice. But still probably not enough to persuade us. We would not retire there at least I don't think so. We will probably take the opportunity to spend more time there in the future but might keep it to renting.
Agree with the above. with interest rates here on the floor, investing in a part of France that you know and like could give you a lot of enjoyment. If it is not working out, sell after a few years. You are unlikely to owe any CGT, but it may have gone up enough to cover your costs.So my advice would be not to be scared of doing it. If you have a "French connection" you have more of a reason to do it. 300 days of sunshine will outweigh lots of minor problems!
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