Investing in Alpine French properties
1) A fully-managed buy-to-let ski property. You do not have to do anything and you are paid (usually quarterly) a rental income for a period of 9-11 years. Then you can renew or not depending on the operator. You benefit from a full 20% VAT rebate on price and do not have to claim it back as with option 2.
2) A fully-managed rental property but not with guaranteed rental income. Still hassle-free and you can stay in your apartments more freely than with option 1. Length of rental is usually yearly, 3 years or even 9 years sometimes. You claim back the 20% VAT you paid on the purchase price.
3) You purchase an outright ski property and deal with rental management yourself or use a site like Airbnb or a local agent. Rental income is not guaranteed and being in Australia so far away could be problematic or expensive to solve when there is a problem.
For both options 1 & 2, you buy without 20% so that is a big discount on the price.
Optional Rental Management and 20% VAT rebate (option 2)
A full rental management option can be offered if required with local agents.
For those that wish to rent their new property on an ongoing basis, furnished, on short term lets, with 3 services in place e.g. cleaning, laundry and key holding, we can put in place a commercial rental lease and offer the solution for you to reclaim 20% VAT back from the purchase price. A considerable saving! You still retain flexibility of usage – it’s up to you which weeks you use and which you rent so long as you can show the French Tax administration a return. It’s a slightly grey area regarding how many weeks you need to rent it for as obviously you cannot force tourists to rent your property from you, however you should make it available for rental in the region of 9 weeks.
Options 2 & 3
The 20% VAT is amortised over 20 years, so even if you put the lease in place and rent it for 5 years, then take the lease away and stop renting… you will have saved yourself 5% in any case. Please note that for the purposes of the mortgage you will be required to take the mortgage on the VAT inclusive amount then we apply for the VAT back afterwards.
Rental Income Taxation
You can still offset mortgage interest in France (unlike in the UK soon…), as well as accountancy fees, the notary fees upon purchasing, one ‘inspection trip’ per year, various other costs… plus for accounting purposes, you can depreciate circa 90% of the property over 25-30 years, 100% of the furniture over 7 years. In short – if you are taking a mortgage then there will be limited/no tax to pay on your rental income for the first 10-15 years easily. You also generate a recurring deficit so even when the mortgage interest is fully-amortised after 20 years you can offset the deficit that you generated against future rental income. If you are a cash buyer, this also counterbalances the fact that you do not have any mortgage interest to offset. We can introduce you to French accounting firms for professional taxation advice and rental income optimisation.
Ongoing costs (contact us for detailed costs for each property). The below aren’t set in stone but will be once the property is built.
Taxe fonciere (land tax) only payable from year 3 after completion circa €14/m2 of living surface/year (ex: 700€ for a 50 sqm apartment per year)
Taxe d’habitation (council tax) payable from year 1. Circa €14/m2 of living surface/year (not paid for option 1)
Charges de co-propriete (co-ownership charge) circa €20/m2/year. This covers the maintenance of communal areas, inside and out, lift, insurance, sinking fund etc. Can be lower for option 1 depending on the rental management company. We explain clearly the costs for each investment property we show you.
There is a 10-year building guarantee and 2 years fixtures and fittings guarantee provided as standard for new-build Alpine properties in France.