How to invest in French real estate
Do you live in Switzerland but are looking to invest in a rental property in France? We'll explain the real differences regarding property searches, taxes, rental income, notary procedures, etc!
How to invest in a rental property in France
The first thing to do before investing in a rental property is to find that rare gem. To conduct your search for apartments or houses, don't hesitate to call on an expert to save time and avoid unpleasant surprises.
Have you found a property you're interested in? Remember to check that the plan is technically feasible, that the price corresponds to current market prices and that your bank accepts your credit limit, etc.
As soon as your rental property is found and approved, a few notary, financial and administrative steps will then need to be taken before you actually own it.
The good news? Most of these steps (from writing an offer to the final signatures) can be managed remotely from Switzerland!
The same applies to the last step before the handing over of the keys: the signing of the deed of sale. Through an authentic power of attorney that will need to be ratified at the consulate, the future non-resident purchaser can grant power of attorney to a relative or an expert appointee.
The fool-proof way to invest in the right property with no mistakes
Warning: Before completing these notary and financial activities, it's important to ask yourself if the property in which you're looking to invest is a good investment. And most importantly, will it make you money?
If your purchase concerns a property that you wish to occupy yourself, keep in mind the future resale and your potential capital gains. Be careful, however, to consider the tax implications of these capital gains.
If you purchase a property you're planning to rent out, to ensure you don't make a mistake with your selection, compare the rental yields of several properties. It'll tell you if your real estate project will be profitable.
However, calculating a rental yield is not always easy because numerous elements must be taken into account regarding your calculation. To keep you from making a mistake, use the rental return calculator from Horiz.io which allows you to invest error free.
Using this online rental yield calculator, you can see how much your investment will cost or bring in each month. Based on the data entered (monthly rent, charges, taxes, monthly loan payments), this calculator will also tell you if there will be a capital gain on a resale. And all this in just a few clicks!
What are the costs of buying a property in France from Switzerland?
As a Swiss resident, it's entirely possible to purchase a rental investment in France. Several options are at your disposal in the acquisition of real estate in France. Depending on your situation, you can optimize your taxation to the maximum level even if certain expenses can't be avoided.
Costs related to your purchase
No matter your situation, the purchaser of a property in France must always pay:
- Notary Fees (2% of the purchase price)
- Registration Fees (5.8%)
Taxes for non-occupant owners
As a Swiss national, you'll be subject to various taxes related to your rental property. These include:
- Property taxes
- Residence taxes
- Income taxes, as defined by the progressive scale. The tax treaty between France and Switzerland on income and wealth taxes specifies that France has the right to tax income from real estate located on its soil.
- A solidarity tax of 7.5% (for all owners who depend on the mandatory Swiss social security system)
- the IFI (ex: wealth tax)
As such, many Swiss residents pursue investment in a property and become non-occupant owners of French properties. Despite certain difficulties in obtaining financing or finding and managing housing, they're ensuring themselves additional income and a pied-à-terre for their vacations or retirement.