FRENCH laws relating to property ownership, inheritance and taxes are full of traps for the unwary, writes Guillaume Barlet.
As in England, the French authorities are becoming increasingly conscious about health and safety issues for example. But also seeking to ensure that taxes due on the sale or purchase of a property, or on the death of an owner, are not avoided.
Laws often change and it is vital to take advice before embarking on any French property venture, since mistakes often cannot be rectified, or will cost you a substantial sum to put right.
But being prepared can be a real help, so below are examples of some recent issues that have arisen:
Swimming Pool Security
All properties which are used for “business purposes” (which includes letting) should have had their swimming pools enclosed to the necessary standard since May 1, 2004; all other private swimming pools must comply by January 1, 2006.
If you are buying a property that does not comply, you need to arrange for a contract clause providing for the seller to undertake the necessary work before completion.
Surveys
All properties being sold must now have surveys covering termites, asbestos and lead. All sale contracts will provide for this but you need to know how to interpret the reports and what to do if they reveal anything.
Rules are also being introduced to cover the whole of the country by June 17, 2006 that require sellers to disclose any ‘seismic’ risks in the locality. A contract that fails to mention such risks could be rendered null and void, or the seller might have to reduce the sale price.
Taxes
Capital Gains Tax in France has recently been simplified and reduced, and for a non-French EU resident is now levied at a rate of 16%, down from 25%. As in England, there are however complicated rules relating to exemptions and reliefs.
Although a tax agent is not now needed if you sell your property for less than 150,000 euros (about £105,000) or you have owned the property for more than 15 years.
Inheritance
All property in France is subject to French inheritance laws, regardless of whether you have a will or what is in your will. In most instances you cannot simply leave an entire property to your surviving spouse.
If either of two joint owners have children (including any by a previous relationship), those children can become entitled to a share in the property on the death of their parent. If owners have no children, their parents or even grandparents can be entitled to a share.
It is vital to consider these problems before completing the purchase of a French property, to avoid expensive complications later.
Guillaume Barlet is a French lawyer specialising in French assets and wealth management issues for Bank House Investment Management Limited. Guillaume can be contacted by e-mail or by telephone on 01242 520074.