Purchasing a ski property in the French Alps is a dream come true for many people. However, it is essential to consider the various costs associated with buying a ski property, including purchase taxes and legal fees. In this article, we will take a closer look at the purchase costs involved in buying a ski property in the French Alps.
Let’s talk about all the purchase costs a buyer needs to pay when buying an apartment or a chalet in the French Alps.
Any property prices that you see no matter where, in a brochure, on the Internet or anywhere else, are all net prices to the vendor. The purchase taxes and legal costs must be calculated on top of the agreed price with the vendor.
The main difference lies in buying a brand-new property or a secondhand property.
New-build ski properties bought from us at Findhomeabroad are subject to VAT included in the price already (20%). The stamp duty (between 1-3%, the smaller the amount the higher the price of the ski property) is to be paid on top of the purchase price. The stamp duty which includes the legal fees is to be paid on the day of the exchange at the French notary.
Secondhand properties (over five years old and already owned once) are subject only to higher stamp duty/legal fees (average 7.5%). Again this is due to be paid on the day of the exchange at the French notary. There is no VAT to add or claim back.
For the moment, we can already see a big difference in taxes if buying from a new-build ski property or a second-hand ski property. With a difference of 5% on average, this would add 50,000€ on a 1M€ ski property.
VAT reclaim on new-build ski properties
When you let your ski property under the hotel-like short-term management (offering hotel-like services like handover of the keys, cleaning, breakfast and renting it furnished) and it is professionally managed, you can claim back the 20% VAT back on the price. This is because this is considered a commercial activity. However, if you wish to keep this full 20% refund on the price (200,000€ on a 1M€ ski property), you need to let your ski property through this type of rental management for 20 years, and for a minimum of five years. If you stop letting it after five years, you technically should refund the 15/20th of the VAT amount that you received. Once you apply for the VAT (we can organise this for you with an accounting firm), you should receive the VAT amount on what you paid within 3-6 months.
What are the other costs of buying a ski property in the French Alps?
The rest of the costs are the same both for the new or secondhand properties and are:
Bank account fees when buying a property
For transferring the funds to the vendor or issuing bankers drafts. Almost all purchases in the notary happen with transfers, and for issuing these transfers, the banks charge a commission. This can vary a lot, depending on the amount of payment, which bank you are using and your profile as a client. Maybe something to investigate when opening a bank account in the French Alps.
Currency exchange best rates
Contact us if you wish to compare exchange rates. When you buy with pound Sterling on a 1M€ ski property, you can save thousands of euros compared to your high street bank.
Mortgage fees to buy a ski property in the French Alps.
If you decide to buy a property in the French Alps using a French mortgage, you can expect on average 1% of the ski property price to be paid at exchange in mortgage duties. If you are a cash buyer, you do not pay of course.
With new-build properties there are no agent fees added as FindHomeAbroad sells directly from the ski developers without any added agent commission. For second-hand ski properties you need to check if the agency commission is included, it is usually the case.
A recap of buying a ski property in France:
- Property prices in the French Alps do not include purchase taxes and legal costs, which must be calculated on top of the agreed price with the seller.
- Buying a brand-new ski property from a developer includes VAT (20%) and the stamp duty (between 1-3%) is on top of the purchase price, to be paid on the day of exchange at the French notary.
- Secondhand properties are subject to a higher stamp duty/legal fees (average 7.5%), with no VAT to add or claim back.There is a big difference in taxes if buying a new-build ski property or a secondhand ski property, with a difference of 5% on average.
- VAT reclaim (20%) is possible on new-build ski properties when let under the hotel-like scheme for 20 years.
- Other costs of buying a property in the French Alps include bank account fees, mortgage fees (1% duties for French mortgages), and agent fees (if applicable).
- New-build ski properties have no agent fees added, while the seller pays the commission for secondhand ski properties.
SOME FREQUENTLY ASKED QUESTIONS
WHAT ARE THE PITFALLS OF BUYING A PROPERTY IN THE FRENCH ALPS?
Not correctly calculating the costs and taxes of buying a ski property; therefore, we hope that this blog will serve you well.
Not doing the necessary paperwork in advance to authorise the fund transfers for the purchase can result in a more extended period than might be expected. Therefore, potentially missing out on the property opportunity found due to not being able to act quickly for the payment.
In France (and in many countries now), you also have to provide a certificate certifying the origin of the funds used to purchase the ski property. This should be issued by your bank. This takes place just before you can exchange contracts. Without it, you cannot sign off the deeds. Your French notaire can help and issue you with a template to give to your bank for signature.
Not using your own French notary public
In the French Alps, the figure of the notary public in a property transaction is central to the purchase process. His responsibilities are to make the full legal and urbanistic due diligence before the payments are made. Preparation of all contracts for the purchase and in the case of new-build ski properties sold off-plan, checking that everything is in place, including the GFA insurance (completion insurance guarantee) to guarantee the build to its termination if financial problems on the developer’s side arise. At FindHomeAbroad, instead of using the notary used by the vendor, we can recommend the best English-speaking notaries at no extra cost to you, contact us for more info. You will be better represented.
Not investigating in advance all the taxes you must pay as the future owner of the property.
And, of course, not using the right real estate agent for your ski property purchase! At FindHomeAbroad, we provide a highly dedicated service to our clients with 20+ years of experience. It’s never been easier to get in touch!
Some frequently asked questions by our clients:
DO I PAY TAX WHEN BUYING A PROPERTY IN THE FRENCH ALPS?
Yes, when buying any property in Spain, you are obliged by law to pay certain taxes like stamp duties and legal costs to fulfil the purchase. Not paying the taxes and duties cancels your reservation and you will lose your deposit, so please read this blog carefully to obtain all the necessary information about taxes to pay when buying a property in the French Alps.
WHAT ARE THE RESTRICTIONS FOR BUYING PROPERTY IN THE FRENCH ALPS?
When buying a property in the French Alps, no specific restrictions or rules apply as you have in Austria or Switzerland; it doesn’t matter if you are a non-resident or a resident. The only difference can be with the tax amount paid on the rental income or the capital gains tax whether you are an EU resident or not. Regarding the tax on rental income, it is nothing extravagant and does not really make a difference.