Guide to French Leasebacks

French Leasebacks are a Government backed initiative aimed at encouraging the development and purchase of property in the touristic regions of France. Leasebacks make for good long term property investments and providing additional income and a capital asset once your mortgage has been repaid.

They do not generally make for good retirement properties\investments as other residents within the development tend to be tourists and the long term nature of French Leasebacks is not generally suitable.

Where are these Touristic Regions of France

French Leasebacks are very popular in Paris, ski resorts in the Alpes and throughout Provence Alpes Cote d'Azur.

Why Purchase a French Leaseback

As the French Leaseback system is backed by government what advantages are there in owning a leaseback?

The first and most obvious reason is the refund of TVA/VAT on your purchase of the property, you will be able to reclaim TVA/VAT (up to 19.6% on new builds and between 11-14% on refurbished properties) on your purchase of the property.

In addition short term rentals for your property are guaranteed (usually for up to 9-11 years at a yield of 2-5%). When a leaseback is purchased a property management company will agree and sign a commercial lease contract with the purchaser which enables the guaranteed rentals. As a commercial landlord you will be required to charge TVA/VAT when renting the property and pay tax on your rental income.

Leaseback Example

Taking a newly built property of ?100,000 with an 80% mortgage as our example; we can work out the initial costs and benefits to the French Leaseback System.

?100,000 - Total Purchase Price
?80,000 - Provided through mortgage
?20,000 - Deposit on the Property
?5,000 - Legal fees and Land Registry

Making your total expenditure ?105,000

You can then apply for a rebate of TVA/VAT at 19.6% on this newly built property, giving you a rebate of ?16,387 and therefore giving your total cost of ownership of ?88,613.

Selling your Leaseback

You own the property 100% and can sell at anytime.

Until recently you would have been liable for a pro-rata refund of the refunded TVA/VAT if you sold the leaseback within 20 years. This has now been changed in line with other European countries and you can now sell your leaseback at anytime without having to refund the TVA. The new purchaser however must continue the leaseback arrangement. As with all property in France you may need to pay Capital Gains Tax at 16% if you sell in the first 15 years.

View our leaseback properties for sale in France

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