On the 15 May 2012, Francois Hollande became the first socialist president in France for twenty years. His campaign slogan “le changement c’est maintenant” (“change is now”) clearly indicated that his coming to office would bring about change – but just how much is anticipated for the property market?
“A new president does not mean a completely new government,” said Tim Swannie, the director of Home Hunts. “However, there will be some changes to taxation, such as inheritance tax allowances, wealth tax and also capital gains tax possibly.”
Hollande indicated during his campaign that, once president, he would bring the wealth tax threshold down to €800,000. This is the level it was at before 2011 when it was increased to €1.3 million. However, the president’s new parliament, to be elected in June 2012, may introduce a one-off top up tax instead.
In terms of the current capital gains tax rules, if the property is a second home then capital gains tax is due unless the property has been owned for 30 years or more – with the rate being tapered and more favourable for long-term than for short-term owners. Before his election the president also suggested that he was considering reducing inheritance tax allowances available to children, which currently stands at €160,000, to €100,000.
Whatever changes Hollande decides to introduce – these are expected to be revealed in the second half of 2012 – as long as professional and qualified advice is sought property investors can ensure that the financial impact is kept to a minimum. As buyer’s agents, Home Hunts works on behalf of its clients and always assists them with the fiscal optimisation of any property purchase.
“As long as a purchase is structured correctly from the outset, you can minimise any impact new rulings might have,” said Tim. “Our customers can feel confident that they will receive the best advice possible – particularly from a taxation standpoint.”
France constantly rates as one of the most secure countries for property investment. High net worth individuals considers Paris to be one of the world’s safest havens, along with London and New York, and French locations such as Cap Ferrat, Courcheval, St Tropez and Cannes are among the most prestigious and highly valued in the world.
So far the change in presidency has not affected the continuing growth in French luxury property investment, which has been encouraged by a favourable exchange rate for international buyers.
“We had a record month in May 2012, so the market seems very buoyant at present,” said Tim. “Buyers seem to be taking advantage of the positive exchange rates and we have been able to negotiate some fantastic deals for our clients. Despite the changes that could come into play we expect to see a continued increase in French luxury property investment from both European and international buyers.”