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Selling and buying a new house in France


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I have searched the forum but cannot find an answer to my question which is:

has anyone bought a house in France without selling their current one first.

We currently have a holiday home in France and would like to make a permanent move to France in the near future. Our intention would be to live in our current holiday home whilst searching for our 'dream' home in France.

We would need to sell the current house to fund the purchase of the new one but understand that the system is very different to the UK as they don't seem to have 'chains' and once you have found your new house you need to sign the promise to buy. How does this work if you still have a house to sell??

Any advice would be gratefully received as we do not really want to sell first and then rent somewhere whilst we search for our next property, well not unless we really have to.

Many thanks

 

  

 

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I am no expert but it seems to me that you will need to get finance until you sell the existing property. We used to have bridging loans in the UK - maybe some banks still do them, but with the current market maybe not. Not sure what the French banks would do. In any event at best they would only lend a proportion of the value and the interest and other costs could well outweigh the cost of renting.

You could, subject to status, apply for a mortgage on the new property, and put a 'clause suspensive' in the purchase contract so that if you did not get the mortgage you could pull out of the purchase. If you have set your heart on the new place that will not leave you feeling very pleased but at least you would not be out of pocket.

To be honest, if I were in your position I would follow the line outlined in your final paragraph; although you would obviously prefer not to go down that route it is the only one which will give you a degree of certainty and peace of mind!

Andy

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French lenders have a 'prêt relais', which is roughly equivalent to a bridging loan. These are quite common in France, where there is not the same 'chain' system in house sales and people commonly buy one house before the sale has completed on their previous home. Having done this ourselves it certainly eases the pressure and makes moving almost a pleasure. The lender normally imposes a time limit on the loan, and if the sale has not completed in time the loan is converted to a mortgage, with all the legality and responsibility this involves.

So such a loan is not to be undertaken lightly - particularly in the present economic climate. Probably not a good idea to commit yourself to the next purchase until you have at least an agreed offer for your present house, better still a signed compromis de vente.

Making a purchase subject to obtaining finance is a standard clause, but it cannot be used as a get-out if you change your mind, because a notaire or agent immobilier could fix up a loan on your behalf and insist you complete the transaction or pay a penalty (normally 10% of purchase price plus costs).

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I would advise on no account to commit to purchasing another property until you have sold your existing one, if the purchase of one depends on the sale of the other. Even in the so-called good times.

Around 30 000 French people are curently caught in the bridging loan trap - basically they have bought a second property using a two-year bridging loan on their existing property (80% of its value normally) - BUT have failed to sell the first property within two years, and are now being pressed by the banks to repay the bridging loan with money they do not have. This is in addition in many cases to paying two lots of mortgage instalments for two years or more.

Sell first, rent if necessary until you find something else. There is a wide choice of properties on offer and some prices, in some areas are coming down. If you lose a 'dream home' I guarantee you will find an even nicer one just arund the corner.

Peter-Danton de ROUFFIGNAC www.francemediterraneanproperty.com

 

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I would look into capital gains tax on having 2 homes in france, if you are a UK resident you will pay the max 16% of any increase in your second home but if you become resident for tax in france you have to pay an additional 11% which could turn out quite costly, I'm saying this as a layman you really nead to speak to a tax advisor about this if you plan to become a tax resident. I'm sure someone here can give you the exact status of doing this kind of transaction.
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Thank you for all your replies.

CGT is another issue I am unsure about. Does anyone know whether you still have to pay this if you intend to put the profit made on the sale into another property in France? Although I suppose if you have to sell first and then rent while you search for your new property, you would have to pay the tax liability anyway but could you claim it back if you purchase another house?

Again any help would be most appreciated especially if anyone else has actually been through this process.

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Capital gains tax (plus values in France) is, basically, payable on any secondary residence regardless of whether or not you are buying another house in France. There are certain allowances and abattements, and exceptions for those resident outside France - you would need to talk to a notaire about whether these may apply to you. If you are French tax resident and selling your principal home, no plus values are normally payable.

If you are fiscally resident in France and selling your principal residence, and you are buying another house, then as long as you sell your original house within (I think) two years of buying the next one, and you have not rented it out in the meantime, you can avoid paying plus values on the original house, despite it becoming a 'secondary residence' for a time. If you move into your present holiday home, and this becomes your 'official' address for purposes such as tax, health care, employment etc, then it becomes your 'maison principale' and so no tax will be payable on it.

Of course, if you are not tax resident in France then you may have tax to pay in your normal country of residence, depending on whatever double taxation agreement is in force at the time.

It is a complicated subject, so do speak to a qualified professional about it because the above is very much a simplification and there are a lot of different parts to the equation.

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