Sarkozy / interest payments on first homes tax-deductible?

[Crevette]

Does anyone know anything more about these policies ;

 

"Sarkozy, who has made overhauling Europe’s third largest economy the central priority of his five-year term, promised during the election campaign to initiate policies that should transform the French outlook on property ownership – making homes in France wealth-creating assets as well as merely places to live.

 

Among other measures, he plans to make interest payments on first homes tax-deductible in order to boost incentives for first-time property buyers..."

 

Is this measure introduced to allow locals a chance to buy in areas where property values are inflated by foreign buyers? Is there a likely time-scale for it's introduction.

 

As a prospective first time buyer and french tax payer, I am very interested to know the details!

 

Regards,

 

-Rob-

[cooperlola]

Isn't that the point about political proposals?  They are not always thought out as far as the details are concerned! (Like the small matter of how it gets paid for...)

[Benjamin]

I don't know a lot about French politics but if it's anything like the UK those wishing to be elected make all sorts of suggestive promises for the goodies that are coming along.

In the UK these can be included in a manifesto our just be said verbally.

It's only after the elections that the successful ones are then required to put some bones to their promises. You'll have to wait to see what actually happens but the first 100 days normally sorts this type of thing out.

EDIT; cooperlola beat me to it.[:P]

[Pickles]

In the Economist (April 14th) there is a comparison of the costs of Sego, Sarko and Bayrou's campaign announcements as assessed by l'Institut de l'Entreprise (referenced as www.debat2007.fr): the result was that Sego's proposals would cost €63 billion vs Sarko's €74 billion (and Bayrou's at €28 billion).

I have a suspicion that at this stage the main effect of any proposal to offset mortgage interest payments on a principal residence against income in tax liability calculations would be to increase further the pressure of demand in the housing market and hence just to drive up prices still higher. I'm not sure that waiting for a possible tax deduction to be announced is a good reason to hold off from buying now, nor a good reason to jump into the market later ... the decision to buy probably needs to be made on longer-term considerations. However, that's not much use if in the short term you can't afford to buy.

Regards

Pickles

[Crevette]

Metrofrance had an article on this from "les echos" ;

 

"Le 24 mai 2007

Un crédit d'impôt pour les nouveaux propriétaires

La mesure bénéficiera aux primo-accédants ayant concrétisé leur achat depuis le 6 mai. La déduction sera plafonnée à hauteur de 20% des revenus."

(pour les recidences principales)

 

Sounds good - although it's still not too clear to me. If I understand well it means that the interest you pay on the loan can be deducted from your tax bill up to the value of 20% of your revenue.

 

If I understand well it could mean that you get an interest free loan if your loan isn't too big and if you pay a lot of taxes.

 

Wouldn't apply if you "buy to let" though (or for non french tax payers).

 

-Rob-

[Clair]

As I understand it, a homeowner will be able to deduct interest up to 20% of his declared income, for his main residence only, bought after 6th May 2007.

The 20% figure is the average tax rate in France.

[Clair]

Change of tune: Sarkozy étend la déduction à tous les emprunts en cours

The same would apply to all current home loans, regardless of the time of purchase, not just for first-time home-owners, as long as the loan is for a main residence.

If no income tax is payable and no deduction posssible, a refund cheque would be sent.

Duration of deduction would be 10 years maximum.