Quick Guide To Buying a Ski Property in the French Alps

As a seasoned professional in the real estate sector, this document is curated to provide an extensive overview for those aspiring to own a ski property in the famed French Alps, focusing on the main French Alps areas: Haute Savoie, Savoie and Isère. This guide aims to quickly explain the process, addressing pivotal steps and common inquiries. It is, however, an introductory resource and not an exhaustive compendium.

The Buying Process

Notary Involvement

• Essential Role: In France, engaging a Notary (notaire) is imperative for the legal processing of property sales.
• Representation Protocol: Typically, in France, a single Notary represents both parties, streamlining the transaction.
• Buyer’s Choice: Buyers may opt for their own Notary, leading to a shared fee arrangement between the two Notaries. We recommend an English-speaking notary who will represent you, write a report and answer all your legal questions at no extra cost. He can also advise on the best structure to purchase the ski property, whether it is in your own name or through a company (an SCI or SARL).

Compromis de Vente or Contrat de Réservation

• Contract Initiation: Post offer acceptance, the Notary drafts the reservation contract signifying the preliminary agreement between seller and buyer. A good point in France is that once the contract is signed at a given price, that price cannot be changed or increased.
• Deposit system: A deposit, ranging from 5-10% of the property’s value, is secured with the Notary. For new-builds, it is usually 2-5% of the property price but can be lower as well, as low as 1,500€. This is paid into an escrow account under your name at the notary, it is totally safe. When you apply for a French mortgage, in case of refusal, you are refunded your deposit without any questions.
• Statutory Cooling-Off Period: French Law mandates a 10-day cooling-off period for buyer reconsideration following the contract signing. It runs from the moment the seller signs the reservation contracts and lets you know about the cooling-off period starting.
• Document Preparation Timeline: Typically, a 2-3-month duration is needed for the Notary to collate final sale documents and pertinent information. In case of the buyer needing a French mortgage, it can take between 3-5 months for the French mortgage offer to be ready.

Acte Authentique

• Contract Completion / Signing deeds: This is the final stage of the contract, executed in the presence of a Notary.
• Proxy Facility: Proxy signing is available for absentee buyers or for buyers living abroad who find it difficult to travel on a particular date.
• Transfer of Property Title: The buyer is officially registered as the new owner upon contract completion (once all the funds are paid of course!).

Financial Aspects

Legal Fees

• New-Build Property Acquisitions: Legal costs, inclusive of Notary fees, stamp duty and taxes, are typically about 2-3% of the purchase price.
• Resale Transactions (older than 5 years old): Approximately 7-8%.

Société Civile Immobilière (SCI) Or SARL (similar to LLC)

• Strategic Ownership: SCI or SARL is a corporate structure for collective property ownership, ideal for joint purchases.
• Fiscal Benefits: Besides facilitating ownership transfers, it offers exemptions from annual Wealth Tax and Inheritance Tax (starting at 1.3M€).
• Tax Liabilities: Declaration of rental income and capital gains for tax purposes is mandatory. An accountant service costs approximately 300€/year to cover this.

French Mortgage Considerations

• Lending Restrictions: Under French regulations, mortgage repayments cannot exceed 30% of the borrower’s monthly income.
• Common Mortgage Arrangements: A standard arrangement is a 70% LTV French mortgage spanning 20 years. Usually, a 20-30% deposit on average is needed in France, but this can be less or more, depending on your financial profile.

Payment Structure

• New-Build Ski Properties: Payment schedules align with various construction stages, from reservation to completion. Typically: foundations (30%) – Roof (70%) – Delivery (100%)
• Some newly built ski properties in the French Alps let you claim back the 20% VAT on the price if you undertake the fully managed rental in place.
• Property Resales: Involves a 10% deposit upon contract signing, with the remainder due at ownership transfer.

Capital Gains Tax

• Tax Calculation: This is determined by the difference between the purchase and sale price, including renovation expenditures.
• Duration-Based Deductions: The length of property ownership influences the tax deduction rate on capital gains. The more you own, the more the tax decreases.

Supplementary Information

Rental Ventures

• Rental Options: Options with different services on offer for holiday lets. French legislation is very advantageous in general. All rental-related expenditures + French mortgage interest if in place + 1/25th of the property price paid can be offset each year to calculate the net taxable rental income. You can generate a good rental income for many years without incurring tax on the income.
• Leaseback Program: This scheme offers a guaranteed rental return for a specified duration.

Operational Costs and Taxation

• French Taxes: Comprises the land tax “taxe foncière” and the council tax “taxe d’habitation.” Expect about 15€/m2/year. 750€/year for each tax on a 50 sqm property.
• Service Charges: These depend on the property’s size and amenities and the building of an apartment. A complex with a pool and Spa will necessarily increase the service charges to pay.

How to register with French Revenue the first time?