Buying a holiday home in the South of France is a dream many of us have. Over the years, we have received many questions from our guests regarding the purchase of an apartment in Sainte Maxime, questions that we ourselves had when we were faced with realizing our French dream. We have therefore gathered below 11 good advice about our own personal experiences, which we hope can give motivation to others to realize their dreams. At the outset, we must emphasize that we are not experts in property trading, in fact we had no experience at all when we started, so the following is only intended as inspiration.

1. Buying a holiday home in the South of France – but where

After several years of holidaying in the south of France, we thought it was time to invest in a smaller holiday home, as we wanted to become part of the French – call it cultural curiosity. When buying a holiday home in the South of France, just like in Denmark, there are conditions that you must be aware of:

1. Location: Where exactly should the home be located?
2. Applicability: what do you use the home for? Skiing holiday, beach holiday, golf holiday? The home should be nearby.
3. Housing type: Do you want an apartment, small terraced house or villa? Each type of home has its advantages, but remember to look at the running costs, as it can be especially expensive with a villa for maintenance. But common expenses can also fluctuate a lot.
4. Price - what budget do you have and how do you think it should be financed.

We searched widely, and as you know, the choice fell on the charming harbor town of Sainte Maxime, which was a bit of a coincidence, as we were originally very fascinated by the area around Port Grimaud. In 2004, we really started looking for a holiday home, but didn't quite know where to start, just like we couldn't read, speak or understand the French language. Not the most ideal starting point when you have to invest a large sum of 2,000 km. from home.

In terms of budget, we had set a ceiling for the price of buying a holiday home in the South of France, but quickly had to admit that we had to reassess the budget, especially if we wanted both a sea view and access to a pool.

My advice to new home seekers is several:

1. Use the Internet; our favorite site is www.twimmo.com where there are several search criteria.
2. Collect housing newspapers that are available for free in stands in several places in the city streets
3. Visit the local real estate agents and ask for a preview

Most real estate agents can speak a little English, so language should rarely be an issue. However, our real estate agent only knew French, so it was definitely a fun experience for all parties!
If you find an interesting home, you should just check the notaries' (explained later) website: www.immoprix.com, and compare prices on homes previously sold in the area.

Update:
Nykredit offers to act as a Buyer Broker, which means that Nykredit searches the market for the home you want. Possible homes are displayed virtually via PC, and when you have 3-5 homes left, you should see them in real life. If you choose one of the homes, the Buyer-broker contacts the Seller-broker, and the fee is shared between the two parties. In other words, it is not more expensive for you to use a Buyer broker.

2. The dream home found, but what about the price?

There are many pitfalls in real estate transactions, and this applies not least to the purchase of a holiday home in the South of France. Today, it is permitted to trade housing without an estate agent, i.e. directly between seller and buyer, but you should only consider this if you speak fluent French and perhaps also know the seller.
Use a real estate agent and get a lawyer attached, there are several very skilled and Danish-speaking lawyers along the Riviera.

Our real estate agent told us that in France - and not in the South of France at all - the price is negotiable. In other words, we just had to accept the seller's price. But that's how we Danes are not arranged, so when we came home from holiday, a long-term writing began. And ended with a total price drop of just over EUR 10,000.00. So our advice is clear; the price is negotiable, but beware of the Danish attitude, it does not work in France. If you bid too low, you risk the trade stopping completely. And never offer “money under the table” as it can have serious consequences in case the tax authorities get involved in pricing.

Please note that Nykredit offers up to 80% financing of the property price

3. Who does what about the real estate business

In France, a notary is appointed, appointed by the French Ministry of Justice. The notary has the exclusive right to inspect the purchase agreement, just as he is responsible for ensuring that the transaction complies with all the rules of law.

Payment of disbursement, usually 10% of the purchase price, and subsequently the remaining purchase price is paid to the notary, as he also acts as the state's extended arm for the collection of taxes and duties. But he is actually independent, which is a bit strange from a Danish perspective.

The notary has a state-guaranteed liability insurance and both the deposit and the purchase price are managed by the public bank "Caisse de dépôt et consignation", as security for the transaction. You therefore do not have to be nervous about having to pay large sums to the Notary, which we ourselves initially had our scruples about, because you never know… ..
The above also applies to private transactions, as the notary must be used for all residential transactions.

When buying a holiday home in the South of France, a purchase agreement is drawn up which sets out the terms and conditions of the transaction. For this purpose, you must provide copies of baptism and marriage certificates as well as passports. In addition, information about residence, position and assets. To our great surprise, my dear wife had to state her maiden name, as it is entered in the deed, just as it must be stated if you have been divorced and remarried. It must be thorough!
The notary then examines various ownership issues in relation to the land registry certificate, and here you can experience that the cadastral drawing may have a different postcode, but this is how it is in France.

In the purchase agreement, you must decide whether you want to pay in cash and who will appear as the buyer. All trades are in cash in France, as you can not take on debt. We therefore chose to buy cash and get the financing in place in Denmark in order to subsequently have to prepare a French tax return. However, it did not become quite that simple when we later chose to tax our rental income in France, but that's how you can become so smart afterwards.
There are several options for choosing who should be the buyer: joint ownership, separate ownership or purchase through a French property partnership, called SCI. Essential to this choice is the consideration of the special French inheritance rules and estate taxes. In addition, it should be mentioned that the surviving spouse no longer has to pay estate taxes, but the estate must be changed upon the death of the first deceased, just as the cohabitant and special children must pay 60% in estate taxes. With such cumbersome rules, we chose "again" to get married in France. The local lawyer helps with the practical paperwork and can clearly be recommended so that the longest living can continue to sit in unaltered residence and can not be forced to sell everything.

Payment and deadlines

Before signing the purchase agreement, which can also be done via fax or email, the buyer pays a deposit of approx. 7% of the purchase price to the notary.

The French state charges 5,09% in change of ownership installments and the cost of the notary is approx. 1%.

When buying a holiday home in the South of France, the buyer first signs the agreement, which is then sent to the seller. You then hope that the seller will sign, but the waiting time can be long. When this has happened, the closing slip with signatures is sent as registered letter to the buyer. You then sign off on a receipt and then have a 7-day right of withdrawal if you should have regretted the transaction.
In the closing note, the buyer signs that he will obtain a loan offer within 14 days. If he cannot be loan approved, the transaction is canceled and the buyer gets his deposit returned.
Once the loan offer has been approved, there is an additional deadline of 11 days, as the buyer must not sign the loan until after the deadline. Here you just have to have a calendar in front of you! Compared to Denmark somewhat confusing, but the lawyer is constantly helping to support and help the seller.

5. The lap

The final deed is most often a repetition of the final note and under preparation for a few months, and can only be signed when the notary has provided information about ownership and easements, statutory investigations, registration matters, etc. In fact, we had an experience that the trade was even more thorough in its preparation than in Denmark.

Then we waited - and waited - and we waited to receive the deed. But it never came!
Instead, we were sent a copy when the original was kept at the Notary, and later in a nationwide archive in Marseilles.
The deed is even very long and often 35-40 pages, as it, unlike a Danish deed, includes many consumer protection rules that are most often written out in full as well as references to various laws and sections.
When buying a holiday home in the South of France, there is also no actual condition report or change of ownership insurance in what you buy as occupied, which simply means that neither the seller nor the estate agent can be held responsible for errors and omissions, although not if it is a direct criminal offence. When buying a larger home such as a villa, I would recommend bringing a professional to assess the home, but in our case – buying a small apartment – we judged that it was not necessary.

6. The binding signature

The takeover date is stated in the purchase agreement by a deadline and is thus not fixed, which means that you must now sign. It takes place at the Notary, where the notary reads the entire deed - in French!
For this, there must be an interpreter present - typically the lawyer or an interpreter called for the purpose (paid by the buyer!) - who continuously translates each section to ensure that the parties have understood the provision of the purchase agreement. A slow and tedious process, so we chose instead to have a power of attorney drawn up in Denmark, so that our lawyer could sign the agreement on our behalf - and we saved a flight.
Prior to that, the lawyer had reviewed the agreement in detail so that we knew the contents in detail.

Upon signing the deed, the remaining purchase price is due for payment, and this is also considered the takeover date. The buyer will then be sent an access document which means that you now have the opportunity to set up a bank in France. And we can only recommend it, as during the year there are many local expenses that have to be paid.

7. Refund

The only tax that is set off is the property tax, also called taxe foncière, which in our case is just over EUR 550.00 per. year. In addition, a housing tax called taxe d´habitation is also paid, which is always paid 100% by the person who occupies the property per. 1st of January. The amount, which is the same size as the property tax, is not set off against a refund, but the buyer must be aware of this.
Both property tax and housing tax are calculated based on the area of the home.
The seller pays all costs to the real estate agent, typically 5% of the property price as well as for various statutory investigations as well as some other taxes

8. Budget at purchase

In addition to one-time costs for the property as well as for the notary and possibly a lawyer or other legal assistance, you as the buyer should set up your budget with a minimum of the following costs:

• The property tax, also called taxe foncière
• Housing tax called taxe d´habitation
• insurances
• Consumption costs, electricity: EDF, gas: GDF
• Water consumption
• Wealth tax if the dwelling exceeds EUR 790,000
• Property value tax in Denmark, valid for all purchases after 28.11.2007.
• Possible subscription to TV / cable TV / Internet. In our case, we pay a relatively high common expense which covers both TV license, water, gardeners, maintenance of the pool and outdoor area as well as all outdoor building maintenance.

When buying condominiums, you should especially note the size of common expenses, which in some cases can even be very high and in some cases be a significant reason for not buying that particular property.

9. Revenue

Basically, you have to buy property in France because you want to stay in the country, as well as take part in the local culture.

Buying property in the south of France solely as an investment can, like any other investment, be fraught with great risk - especially in the short term, when property prices fluctuate widely. If you choose to supplement the expenses with rental income, it is important that you contact Tax and get thoroughly acquainted with the rules regarding taxation. To this end, France has progressive taxation of profits from the sale of property, cf. point 10 below.
Right now (late summer 2010) there have been reductions in taxation, but seek advice on this so that you do not end up in tax cases with either the Danish or French authorities. As our lawyer said: "do not become friends with the French tax authorities!" As previously mentioned, we are not experts in French taxation, but know the rules for owners under the old double taxation rule, ie for people who bought the property before 28.11.2007.
We can therefore not help you with answers regarding tax today, if you are considering buying, but would instead recommend that you seek qualified advice.

10. Capital gains tax

On 1 February 2012, new rules came into force on the taxation of capital gains on the sale of holiday homes, which makes it more expensive to sell. When you sell your holiday home (résidence secondaire), you must now pay capital gains tax (taxe sur la plus value) when you sell. If you live outside France and sell at a price above 150,000 Euros, you are obliged to have a French tax representative (représentation fiscale), even if there is no capital gains tax to pay. They take about 1% of the sale price in fees, deducted in any calculation of capital gains tax.
According to the new rules, it is only tax-free to sell your holiday home after 30 years of ownership against the previous 15 years, as you no longer receive a 10% deduction per. year of ownership.
Instead, 2% is given an annual deduction for sales between the 5th and 17th ownership years, 4% between the 17th and 24th ownership years and 8% between the 24th and 30th ownership years.
Example: a home bought in 2002 for EUR 200,000 and sold in 2012 for EUR 400,000 gives under the new rules only a deduction of 10%, which gives an additional tax of almost EUR 10,000 compared to the old rules.
In addition to this change in the calculation basis, the tax rate for persons resident in France will also be raised from 31.3% to 32.5%. Persons not resident in France (non-residents) but e.g. resident Denmark, are taxed under both the old and the new rules with 19% of the profits from the sale of their holiday home in France.
Profits are calculated both before and now as the difference between the so-called adjusted purchase price and the adjusted sales price:

The purchase price is corrected with the addition of notary costs - either the actual or 7.5% of the purchase price - as well as 15%, if the home has been owned for more than 5 years. If the property is owned for less than 5 years, you must be able to document your improvement costs. Documentation requirements also apply if you want a deduction for improvement costs that exceed the fixed deduction of 15% of the purchase price after 5 years of ownership.

The sales price is adjusted for any brokerage fees, expenses for obtaining the statutory technical reports (diagnostics obligatoires) and possibly fee to a French tax representative.

As a permanent resident of Denmark, you can be exempt from being liable for tax on the gain if the holiday home has been used for private purposes and the land area does not exceed 1,400 m2.

Please note that other rules apply if the holiday home has been purchased through a capital company.

11. And then there is the language…

Already after owning the apartment for a few months, a faucet broke down and we had to get hold of a plumber - who only spoke French! A special experience that contributed to me studying French for 5 years, first at B-level and later at high school A-level. And it can clearly be recommended to learn the language and at the same time get an even greater insight into the French culture and way of life.

I hope that the above has given an insight into the process surrounding the purchase of a holiday home in the South of France. It may seem long, but I myself have felt that I have had to shake hands throughout the process, but of course it depends on where you seek advice. And today I am super happy to take part in French culture.

Bear

Disclaimer:

The above is a description of our completely private experience around buying a home in France and must not be construed as 100% legally correct. As with any other investment, it is therefore necessary to consult with a lawyer and accountant to ensure that applicable law is complied with in both countries. Legislation that is constantly changing.