How to sell a property in France

A house in France is desirable for many people, but what if you want to sell it?

French property transactions differ from those in the UK, and we strongly recommend you get specialist legal advice before committing yourself to anything.

In the current content politics and economics in France, the real estate market tends to be a buyer’s market, which can impact the sale price, but equally, this may prompt potential buyers to look for opportunities.

Many estate agents will give you a free valuation if the agent is assured that they will be in charge of the sale. The agent will ask for a mandate to be signed, and it is important to ensure that this mandate is not exclusive if you want to keep your options open. You should also check the commission terms in the contract.

It is best to set the asking price at a reasonable level from the outset, as too high a price will discourage buyers who may be after a quick transaction and do not wish to spend too much time over negotiations.  Also, if a property is on the market for too long, suspicions may arise about whether there might be a problem with it. Having the compulsory diagnostics (asbestos, electricity, etc) ready, or at least being able to have them carried out at short notice, is a definite plus. Such diagnostics are mandatory and a vendor’s expense.

Compromis de vente

In France, the estate agent produces a draft of the first contract (which is called the “compromis de vente” or sometimes “promesse de vente”). You should have it reviewed by a lawyer, who can discuss its terms with you. They will make sure that necessary disclosures have been made on any issue with the property, which the buyer could, later in the process, pick on, based on non-disclosure. Make sure the contract contains an exclusion clause for liability concerning hidden defects.

Capital Gains Tax in France

In France, the capital gains tax (CGT) is 36.2%, including social charges (plus possibly an additional tax of 1 to 6%, depending on the amount of capital gain of over 50,000 euros), for residents in the EU. Regarding UK residents, the tax is 19% plus a 7.5% “solidarity tax”, totalling 26.5%, provided they can provide evidence that they have social security coverage in the UK and do not depend on the French social security system.

The period of ownership required for a complete exemption from CGT is currently 22 years for the tax element and 30 years for the social charges element, with a complete exemption for the main domicile, irrespective of the duration of ownership. Both exemptions are tapered.

Some people are tempted to treat the property to be sold as their main residence even when it is not. However, this is not a good idea because the tax administration is not naive and has sight of all the deeds of purchase of properties.  Whether or not the vendor owns a property elsewhere does not change this, as it’s perfectly possible not to own one’s effective main residence and pay rent for it, while at the same time owning a holiday home. If the holiday home being sold is not the main residence (and thus a holiday home), then the exemption will not apply. The same goes with artificially reducing the sale price (by way of a side payment made outside the notaire’s account, which should be absolutely avoided. At best, the tax administration will claim additional stamp duty and at worst, it could potentially requalify the sale into a disguised gift taxable at 60% (if made to an unrelated person), plus penalties.  So don’t be tempted to do that!

There are borderline cases, in particular for retired individuals who do spend a great deal of time in France, where it may be somewhat unclear which is the main residence. One has to effectively reside at the French property for over six months (183 days or more), the burden of proof being on the taxpayer in case of disagreement, so it is recommended to keep supermarket receipts and any proof of stable residency in France.

In case of separation or divorce, this usually does not affect the duration of ownership, so long as one of the former couple members remains in the property.

Assuming you are liable to CGT upon the sale, it is possible to somewhat alleviate the taxable basis, by reducing the gap between the price the property was initially bought for and the price for which it is sold by adding various costs to the initial purchase price and deducting various costs from the sale price. A qualified lawyer will be able to advise on this point, and others, to do their best to get you a hassle-free sale.

At Tees we offer specialist bilingual expertise to ensure a stress free and secure process, which may include the following:

• Pre-sale advice on the implications of your sale, considering CGT, vendors' obligations and declarations.
• Examination of agent’s mandate.
• Examine the draft initial contract before signature, including seeking confirmation with local authorities in case of any missing elements in vendors’ declarations.
• Review the draft deed of purchase and liaise with the Notaire regarding any desired changes.
• Arranging for signature with the notaire or by power of attorney here in the UK and checking draft proxies. 
• Reporting on all contractual documentation and producing attestations confirming the same for French Notaire and Notary Public where required.
• Finalising arrangements for the payment of funds.

Call our specialist solicitors on 0808 231 1320

what to do next

If you want to learn more, speak with our French legal team.  

We have offices in:

Cambridgeshire: Cambridge
Essex: Brentwood, Chelmsford, and Saffron Walden
Hertfordshire: Bishop's Stortford and Royston