MOVING TO FRANCE.

Overview.

House prices fell by 10% in 2008-9 but latest figures from FNAIM, the Federation of French Estate Agents, show that they are on the rise with predictions that prime areas of Paris and the Riviera could see increases of 15% in the coming years.

Mark Harvey of Knight Frank says prices peak for waterfront villas on Cap Ferrat and St Tropez where international buyers have pushed prices sky high. Finding value in such a large country, however, is possible. 'Castelleras above Mougins is a well-kept secret offering security, tranquillity and ease of access,' says Harvey. Prices there can be half of those in Mougins.

Making the effort to travel a little off the beaten track can reap rewards says Harvey. 'Eze is better value than Villefranche, in the Alps Meribel provides better value than Courchevel for the same slopes, and Gascony is more affordable than the Dordogne.'

Typical Property Prices.

Knight Frank says typical prices across France include €2 million for a prime two-bedroom apartment on the Croisette in Cannes, €750,000 for a three-bedroom townhouse in St Remy in Provence, and under €1 million for a substantial property with land in Gascony.

The Purchasing Process.

The Code Napoleon designed in 1804 forms the basis of French property law.

Once you have found a property and agreed a purchase price both buyer and seller sign the Compromise de Vente, a legally binding contract confirming the sale price and the completion date. After a seven day cooling off period the buyer pays a 10% deposit. This contract is legally binding although there can be clauses suspensifs, get-out clauses in effect, making it subject to mortgage provision or the selling of another property.

The final contract, the Acte de Vente, is signed by both parties in front of the Notary.

France's inheritance laws are complex and give precedence to blood relatives over any spouse. By inserting a clause tontine in the Acte de Vente – and this can only be done when you sign it – you can transfer the property on your death to the surviving spouse. Detailed legal advice is essential.

Cost of Buying Property.

Typically allow 7% of the purchase price for resale property over five years old, and 2.5% for property less than five years old and off-plan property.

Costs include:

• Stamp Duty and Notary 1.58%.
• Droit d'enregistrement, a tax payable to the state: 5.09% on older property, otherwise 0.71%.
• Costs of 0.5%.
• French VAT (TVA) is charged at 19.6% on most fees.
• Estate agent fees of up to 5%.

Taxes.

Income tax rates range from 5.5% to a top rate of 41%.

Capital Gains Tax, which is not applicable on main residences, is rising from 19% to 32.5% from 2012. UK residents pay 19% Capital Gains on a sliding scale that will see no tax liable after 30 years.

Inheritance Tax is 5-40%.

France has a double tax treaty with the UK.

France has a wealth tax but new rules due to come into effect in 2012 are set to make it a great deal more attractive to high net worth individuals. The threshold for this tax (ISF) is increasing from €800,000 to €1.3 million with a top rate of 0.5% on assets over €3 million.

Leaseback.

Leaseback properties offer substantial tax breaks in exchange for leasing the property back to a letting company. Buyers who do this are entitled to a refund of the VAT – 19.6% – but will have limited access to their property. These properties are generally in top tourist locations like the Alps and coastal regions and are aimed at encouraging ‘hot' beds so that property is occupied for more of the year. Owners will get a guaranteed income as well as a few weeks personal use each year. At the end of the leaseback period, typically 9-11 years, the property is yours.

Renting in Paris.

If you plan to rent out property that you own in Paris you must obtain a licence. Failure to do so can incur steep fines.

Overview.

France is considered to enjoy a high standard of education, at all stages of the educational process whether the child attends a state, private or international school.

Schools for international students.

As well as international schools, France also has schools which offer what is termed an ‘International Section', accommodating British, American and other nationalities. These offer language and literature studies to a higher level than the standard school curriculum.

These schools are primarily aimed at international students planning to return to school in their home country. Many French students also choose to study at these schools to take advantage of the higher level of language training offered.

Local state schools.

State schools are free and state education is considered to be well-organised and well-funded. The curriculum is generally consistent across the country and also in France's overseas territories.

Attendance at state schools is compulsory between the ages of six and 16, although many French children start even earlier at four.

The French education system stipulates 26 hours of classes each week, although when studying for university entrance, this might rise to around 40 hours.

The length of the school day is usually broken down into three hours in the morning, followed by a two hour lunch break, then three hours in the afternoon. The school week runs from Monday to Friday, but takes a break mid-week with no classes on a Wednesday.

Many schools have classes on a Saturday morning, but arrangements can vary from area to area and parents should check with the school in advance.

School holidays take the form of two-week breaks in the autumn, in December, early spring and then around April-May.

Progress is assessed by report cards issued three times a year.

If you become resident in France you will be taxed as a French national, that is, on your worldwide income. A treaty with the UK prevents double taxation. For high-earners, the top rate of income tax is 41%. Additionally, investment gains are now taxed via a mixture of basic rate and various social surcharges at 31.3%.That rate also applies to interest or dividends that are taxed at source, as well as to profits on property sales.

A wealth tax for non-residents who hold French assets also applies from €800,000 at an initial rate of 0.55%, rising to as much as 1.8% for those with assets above €16,790,000.