Buying a ski property in the French Alps can seem a daunting process. This buying guide gives a step-by-step overview of buying and owning a ski apartment or ski chalet in France.
As with any property purchase, it is important to get expert advice.
In France, a notary must be involved with the sale and purchase of a property. A single notary generally acts on behalf of both the buyer and seller, although the buyer can choose his own - and the buyer pays the notary's fees.
There are no restrictions on EU nationals buying and owning a property in France.
Once the seller has accepted the buyer's offer, the notary - or sometimes the estate agent - draws up the first legal document in French, the "Compromis de Vente" or a "Contrat de Reservation" if the ski property is off-plan. Both the seller and the buyer sign this. This Compromis is valid for several months and sets the date of completion for the purchase.
On signing the Compromis the buyer pays a deposit of approx. 5 - 10% to the notary. The buyer loses this amount if he later withdraws from the purchase unless for a condition specified in the Compromis. The notary then prepares the final documents for the property sale and gathers all of the relevant information. This typically takes around 3 months.
The Compromis can contain "Clause Suspensives" which allow the buyer or seller to withdraw from the purchase under certain, specified circumstances. The most common clause suspensive relates to the buyer's ability to get a mortgage to finance the purchase.
The buyer also receives various surveys on the general condition of the property, such as Energy Performance, Asbestos, Lead, Termite Damage, Certificate of Surface Area “Loi Carrez” (for apartments), Gas, Electricity, Water Drainage and Natural Risks. Structural surveys are not standard (or required) in France.
The Compromis is a legal document, so it is important to check that all of the details are correct and that you understand it fully. Take additional, expert advice if necessary.
In most sales/purchases, there is a mandatory 10 day cooling off period, once the buyer receives the signed Compromis (signed by both buyer and seller), During the 10 days the buyer can withdraw from the purchase without penalty.
The Acte Authentique is the final contract signed by both the buyer and seller usually in front of the notary. It is possible to sign by proxy (normally before a local notary) if you can't attend the meeting easily.
On signing the Acte Authentique, the buyer must pay the remaining funds to the notary. At this point the buyer becomes the registered owner of the property. It is important to have property insurance in place on signing the Acte Authentique.
Properties in ski resorts in France fall into two main types: new builds and re-sales.
In French ski resorts are often sold as leaseback properties. Under this scheme the buyer purchases the property freehold and leases it back immediately to the developer for a defined number of years. The buyer is entitled to use the property for specific weeks each year, and receives a small rent.
The buyer can also recover the VAT (or "TVA") on the purchase price, a saving of 19.6%. Some developers will deduct the TVA from the advertised sale price automatically. The only restriction on the sale of the property is that the new buyer must accept the terms of the lease. The owner cannot change the interior whilst the ski property is in the leaseback scheme and it is maintained by the developer.
These are sold by private owners or ski resort estate agents. The buyer purchases the property freehold and is free to use, rent, renovate or sell the property. There is no restriction on re-sale, though capital gains tax and TVA may be payable.
If the ski apartment or ski chalet is new, the legal costs (a combination of notary fees and taxes), are approx 3% of the purchase price. For a resale ski apartment or ski chalet the purchase fees are approx 7%.
The agency commission is usually included in the sales price and the buyer does not pay anything further. The buyer is however responsible for paying the notary fees, as mentioned.
Under French Law, French lenders can only offer mortgages where the buyer’s repayments total less than 30% of their monthly income, including any existing mortgages. French banks may lend up to 80% of the purchase price. Mortgages may have a variable, capped or fixed rates, and are nearly all repayment mortgages.
Read our guide to French Mortgages for more information.
It is important to consider currency issues when buying a property, first for the purchase itself and secondly for any ongoing mortgage payments. While most banks offer currency exchange services, a currency broker will generally offer a better exchange rate and can help you structure payments. For smaller transactions, a pre-paid currency card can also be more economical.
If you propose to use mortgage funds from your resident country (i.e. outside of France) to buy your property, remember to take into account currency risk and fluctuation.
Read our guide to Currency Exchange for more information.
New-builds have a 10-year insurance-backed guarantee, by law, against latent defects. Payments for new-builds are normally made in stages:
Sometimes, it is a good idea to buy a finished property in the name of a French company known as an SCI (Société Civile Immobilière). An SCI is essentially a private, limited and fully incorporated company with a registered office in France. The office can be the property itself, and the shareholders can be friends or family members.
While there are no savings on purchase, using an SCI may bring tax benefits. There is no liability to pay annual Wealth Tax, and Inheritance Tax is minimized. The ownership can also be changed more easily.
However any usage of the property free of charge by the shareholders and any rental income must be declared in personal tax returns. There are also set-up costs and annual accounting fees.
There are two local taxes on French property:
As well as the above taxes, additional running costs include: utility bills, service charges associated with general maintenance (normally for apartments only), property insurance and a television licence (“La Redevance Audiovisuelle).
Rental agencies operate in all major ski resorts in the French Alps providing full rental and management services, typically for 20%-25% commission. There are two forms of rental options, holiday and long-term lets.
Leaseback Property is one option of ensuring a rental return, although the income yield can be low after deduction of management and maintenance costs.
All rental income in France is subject to French income tax and must be declared to the French Tax office by 30th April each year. Many countries have a dual taxation treaty with France, though a top-up tax may also be payable in your home country if you are a non-resident.
French Capital Gains Tax applies to secondary residences and is the difference between the property purchase price (after deducting any renovation work completed and invoiced by a French registered artisan) and the property sale price. The gain is then taxable at a starting rate of 19% for European residents plus 15.5% social tax or 34.5% for non-Europeans. The rate tapers after 5 years of ownership at approximately 6% per year. Properties owned for more than 22 years are free of CGT but you may still be liable for a top-up tax in your country of residence.
As of January 1st 2018, the French Wealth Tax, or ISF (Impôt de solidarité sur la fortune) was replaced by a new Real Estate Wealth Tax, the IFI (Impôt sur la fortune Immobilière).
Where the ISF was applicable to ALL assets located in France for a non-resident or worldwide assets for a resident in France, the IFI is only applicable to real estate assets. This includes parts or shares of companies (established in France or abroad) which hold property or real estate rights.
This means all non-real estate assets such financial wealth (securities, investments, cash etc) or moveable assets (jewellery, furniture, cars, boats etc ) are now exempt from the wealth tax.
If the net value of taxable property exceeds €1.3mil, then the first €800,000 is exempt from tax. Wealth tax is then calculated by applying the following scale to each bracket:
|Band of value||Rate of tax|
|Up to 800,000 €||0%|
|800,001 € to 1,300,000 €||0.5%|
|1,300,001 € to 2,570,000 €||0.7%|
|2,570,001 € to 5,000,000 €||1%|
|5,000,001 € to 10,000,000 €||1.25%|
|Above 10,000,000 €||1.5%|
For more information about the IFI, click here.
French succession tax is a tax on gifts and inheritances. Succession tax is paid by each individual beneficiary depending on the amount inherited or received as a gift and their relationship to the deceased/donor. The gift or inheritance is taxable if the deceased/donor is resident in France at the date of death, or if not a French resident, where the asset being gifted is located in France.
From August 2015, EU Regulation No 650/2012 (known as "Brussels IV") gave foreigners the right to choose the succession law of their country of nationality to apply on their death. The deceased’s heirs can obtain a certificate of succession in one EU member state, stating which law applies and who inherits, and that is then accepted in all the other member states where the deceased had assets. You need to make this election before death; otherwise, if you are habitually resident in France, French succession law applies by default.
It is strongly advised to get expert advice on succession laws.