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France is the most popular location for second property investment, with over €297million worth of loans arranged by our international team in 2017, and we anticipate this will only strengthen in 2018 as changes to French Wealth Tax come into effect.
President Macron has announced that the new French Wealth Tax, Impôt sur la fortune immoblière (IFI) – an upgrade to the existing Impôt de solidarité sur la fortune (ISF) – will see investors taxed solely on their real estate assets, rather than all financial assets meaning all other wealth (such as securities, bank and financial investments) is exempt from this tax – great news for investors of French property.
From 1st January 2018, IFI came into effect, and is calculated as follows:
On real estate assets worth €1.3million or more, a 0.5% tax is applied to the net value of property above €800,000. Therefore, the tax is only applicable to the amount of equity an investor has in the property.
For example, if an investor owns a €1.3million property, and has €900,000 equity in it, they will pay 0.5% tax on the €100,000 above €800,000.
IFI is fantastic news for investors of French property, and will please many buyers as France is the most popular location for second home investment.
In terms of average loan sizes, it’s interesting to see how the numbers fall at the end of the year, and the usual suspects of Cap Ferrat, Antibes and Monaco leading the way. Next year will be very interesting to see how the new French Wealth Tax changes affect prices and sales, but my guess it will be business as usual for the Cote d’Azur.
Monaco saw the highest total loans, with €167,695,000 worth of finance arranged, followed by Cap Ferrat and Paris, with €29.85million and €19.3million respectively. Furthermore, Cap Ferrat saw the highest average loan amount – at €9.95million.
Overall, it’s been a fantastic year for our International team. Following the launch in February, it’s gone from strength to strength, as we anticipate the demand for French property will only become greater as the IFI comes into effect.