Change in French Leaseback

The French leaseback system could be one of the best as it is a guaranteed and advantageous rental scheme with numerous incentives.

Firstly, if you purchase a holiday residence in France, you will be able to get the 19.6% VAT back. In order to get a full VAT refund, you will need to rent your property for at least 20 years. The VAT can be paid and claimed back by the developer, in which case you will pay less for you property. Otherwise, the developer can help you out through the claiming process and charge you a small commission for the service. If you choose to do it on your own, expect an average of 9 months delay to get your money back.

Furthermore, the property management company will make things easier for you: the rent will be paid by the property management company whether it is occupied or not. Moreover, it will take care of all your home and paperwork maintenance (repairs, refurbishment, bills…). In addition, it guarantees up to 5% net return on your property.

Finally, you have to declare your income in France and therefore pay taxes. However, thanks to the treaty between France and the UK, you will not be asked to pay taxes twice.

Over the past few years, the economic context changed leading to an evolution of the leaseback investment. At first, typical purchasers of leaseback properties in France were pure investors that were attracted by low rates, enticing rental yields (the measure of the percentage of income return you get from an asset) and the fully managed investment properties.

Potential buyers now have a different profile and different reasons as to why they choose the leaseback option.

If you think you will use your holiday home for only a few weeks a year (up to 8 weeks usually with a maximum of 6 months/year), then the leaseback concept is for you: No need to be a professional investor! You can rent the property out the rest of the year and make profit out of your investment.

If you have a holiday home and don’t want to take care of all the maintenance work while you are there: simply go for a leaseback and leave it to the property management company.

Leaseback is also the solution to your mortgage issues as the rental income will cover some of the amount due.

Another advantage of the leaseback is that property management companies usually let you swap your weeks of occupancy with other resorts: you do not have to stay in the same place forever anymore. Should you prefer to go to the countryside or the sea this year instead of the mountains, then all you need to do is ask!

In conclusion, as opposed to a few years ago when the leaseback was attractive only for investors looking for cost effective investments, it is now a completely viable and convenient option for people purchasing for lifestyle reasons.

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This entry was posted on Thursday, May 6th, 2010 at 8:25 am and is filed under French leaseback . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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