Invest in real estate at Cannes
In this article, will detail most (if not all) of the settings you should keep in mind before, during and after buying a house or apartment. This process does not only apply to Cannes but we'll use it as an example. Thus you will lear how ton invest in real estate at Cannes !
Why invest in real estate at Cannes ?
France : safe country for investments
- 4,5% CAGR forecast for 2024 to 2029 on the price per square meter for luxurious properties (valued over 2 millions).
- 440 million nights booked in 2023 (400 million on average per year since 2013 in France).
- 6% gross rental yield each year (by renting your property for 17 years on average, you will have returned on investment and will start making profits by renting it further or selling it). This long term kind of projects will also serve your successors.
The French government redistributes wealth in order to ease renting an apartment / house for its folk:
- de 600 billions invested in citizen helps
- de 45 billions made available for renovation of rented properties the last 5 years.
- de 95 billions of financiel help through the CAF (funds for students and families).
The French reputation : lots of foreign investors (one third of real estate transactions) are looking for a secondary home in France (mainly Americans, British, Dutch, Swedish, Norvegians). Their main motivations:
- The French Culture histroy, art, architecture and lifestyle
- Security (France is the 16th safest country in the world, ahead of the United States).
- Geographic situation (ideal weather, warm coastlines, ski resorts, beautiful landscapes).
- Professional needs (meetings and events among others).
- Justice equality foreigners are treated the same way as french citizens.
Cannes : ideal for luxe real estate investments
The areas where the price per square meters rises the most are the most interesting ones. In France, they relate to:
- Coastline cities
- Major cities (Paris, Bordeaux, Marseille, Lyon, Nice).
- Ski resorts
- The capital's most prestigious districts (7th, 8th...)
- The French Riviera (Cannes, St Tropez, Nice...)
The numbers on the right show the price evolution between October 2022 and 2023.
Choosing a real estate investment project
Acquiring your main home
Definition : house or apartment where you live at least 8 months per year.
Goal : buy and sell higher later on to make profit.
Strengths
- No tax on the profit made when selling
- IFI (tax on real estate wealth) is 30% lower.
- No inhabitation tax
- Lots of governenmental funds available
- 20M less tax on the legacy of your property.
Drawbacks
- No tax on the profit made when selling
- IFI (tax on real estate wealth) is 30% lower.
- No inhabitation tax
- Lots of governenmental funds available
- 20M less tax on the legacy of your property.
Invest in a secondary home
Definition House or apartment serving as your own seasonal home. Good to know : without furniture it is not considered a secondary home.
Strengths
- No tax on profit when selling if you have owned the property for 22 years or more.
Drawbacks
- Inhabitation tax
Invest in a rental project
Definition Renting a house or apartments to a company or an individual
Goal : rembourser le prix d’achat et les intérêts du prêt grâce aux loyers puis profiter des bénéfices.
Strengths
- Return on your invesments and pay credit interests with the rental incomes.
- Increase the rent price when the market prices and inflation rise.
Drawbacks
- Lots of laws protect the lessors and you must keep the housing in a good state.
Financial ressources for your real estate investment
How to finance your investment ?
1 - Bank credit : if you decide to ask a French bank a credit for the acquisition of real estate, you will have to pay 20% of the property's price yourself.
2- Investment fund you can buy together with other members of an investment fund. For example through an SCI (civil real estate company) : thus the costs will be divided between the associates but so will the benefits. An advantage is the ease of legacy : you can cease parts (actions) of the company to your family over time. 100 000 € can be given each 15 years multiplied by the number of childs without having to pay legacy tax.
3- Buying on your own : if you have enough treasury, you can go ahead on your own.
Investing as an individual or as a company ?
Buying a house or apartement through a company instead can ease legacy because parts of society are easier to cease than a property. However there can be more costs and time spended because you will need to create and maintain your legal entity and handle its administration.
Short term and long term costs
Short term costs :
- Property price (try to negotiate)
- VAT (20% of the property's price)
- Other acquisition costs which represent 3 up to 7% of the property's price. (lawyer and notary honoraries, company creation)
Long term costs :
- Co-ownership costs costs to keep the property in a good state (required for rental projects).
- Inhabitation tax for secondary homes (cost varies depending of the location and value of the property; at Cannes it's on average 1 617 euros per year).
- IFI tax on real estate wealth. Applies if the property's value exceeds 1 300 000 €.
Fiscal reductions for real estate investments
Funds for acquiring your main home
| Aides | Conditions |
|---|---|
|
ECO PTZ. Up to 50 000 € of credit without any interests.
|
For renovations which lead to a better energetic performance score OR for sanitation works.
|
|
PTZ. Up to 100 000 € of credit without interests. |
Buying an "ancient" property in need of renovation. |
|
Ma Prime Rénov' . Up to 35 000 €.
|
Works allowing to gain 2 letters on your DEP score (from D to B for example). Needs an agreement of an ANAH monitor. |
|
Ma Prime Adapt'. Up to 22 000€.
|
For works making life easier at home. Only for 65+ years old seniors or disabled persons.
|
|
30% lower tax on real estate wealth
|
Only applies if the property's is valued over 1 300 000 euros (otherwise you won't even have to pay this tax). |
|
Inhabitation tax |
Since 2023, inhabitation tax is no longer apllied on main homes. |
|
No tax on the benefits when selling. |
Usually, the government charges 30% tax on the profit made when selling real estate. This does not apply for main homes. |
Funds for buying a secondary home
| Aides | Conditions |
|---|---|
|
Lowering inhabitation taxes (from 5 up to 60% saved)
|
For renovations which lead to a better energetic performance score OR for sanitation works.
|
Funds for rental projects
| Aides | Conditions |
|---|---|
|
LMNP (non professional rental of real estate with furniture included). Get your 20% VAT back.
|
The location of the rented housing is in a student's flat, medical residence, touristic residence, business center AND you earn less than 23 000 € / year.
|
|
LMP (professional rental of a housing with furniture) |
Half of the maintenance costs (company costs, credit interests, works) can be substracted from your income and thus you will pay less tax. This goes up to 71% for tourististic / medical / business / student residences. AND the income does not exceed 72 600 € / year (176 200 € for the specific locations listed before). |
|
Pinel + : 9 up to 21% fiscal reduction on your income (max 300 000 € / year).
|
|
|
Loc'Avantages : 15 up to 65% reduction on tax left after substraction of charges.
|
Only applies to housings rented at low prices regarding the market. Needs to be approved by ANAH and is cannot be added to Pinel +. |
|
PTZ credit : up to 100 000 € without interests.
|
For rental projects in an area where the ask for housing is high. OR for buying an old property in need of renovation (any area). |
|
ECO PTZ credit : up to 50 000 € without interests. |
For renovations which lead to a better energetic performance score OR for sanitation works. |
|
Substract credit interests from your taxes |
Allows to substract credit interests as well as other acquisition costs (lawyers, notaries, insurance...) |
Real estate investment process
Search for a real estate investment
As mentionned before, you will have to get close to local professionals, working in the area where you wish to buy a housing. Take time toanalyze the market, visit several properties and find the most interesting opportunity. If you are looking for professionals on the French Riviera, I highly suggest to reach our real estate agency at Cannes called Amanda Properties..
How to select a housing ?
Lots of factors need to be taken into account, here are most of them :
- Price : Compare the price per square meter with those of other properties in the same district.
- Learn more about the rental price per square meter if you're going for a rental project.
- Analyze the market trends in order to favor a district showing a strong increase during the last five years.
- Location: Assess the geographic situation of the housing (distance with the business center, with the shops), analyze with every sense : luminosity, noise, smells, feelings. Look for strenghts : a sea view, on a higher floor, no direct view from neighbors...
- Condition : Ask for all files related to the housing's condition (DEP, renovation bills, construction plans...)
We insist onthe importance of the DEP because if it's score is lower than E, you won't be able to rent it after 2028.If this standard is not met, you could forecast renovations which sometimes require a construction permit.
Negotiate the property's price
So you found an interesting housing ! Now it is time toobtain every file and essential information.Here are the ones you absolutely need to make an informed decision :
- Living and ground surface
- Total price and price per square meter
- Real estate audit (exposure to natural risks)
- Construction plans + is there a valid construction permit available ?
- Long term costs (tax rates in the area).
- DEP score.
With all these documents in your possession, you will be able toestablish conditions in the buying agreement and compare the housing easily with others.Our advice ? Look for a properties that have been for sale for at least 3 months in order to bid 10% lower prices to the sellers. This leads us to the third step.
Real estate buying offer
This offers is ideally written.Specify the price at which you're willing to buy and until when your offer is valid. Don't forget your conditions if you have some. Like the necessity of a valid construction permit for instance.
Establish an agreement to sell
This step is not mandatory but we suggest it to our clients because it makes the process more secure. Two options : write an agreement with private signature directly with the seller or ask a notary for an authentic agreement.
Finalize the deed of sale
The deed of the sale is an authentic act established by a notary.You can either chose a common notary or else each party can have its own. Once the deed of sale signed, you will receive the keys in exchange of the money transfer at the amount specified in the deed and once you have paid the acquisition costs (notary). Once this document gets registered by the fiscal administration (up to several weeks), you property title..
Real estate investment advice.
Real estate experts are plentiful : notaries, promoters, real estate agents... However we advice to reach out to local experts which are worth yout trust and are specialized in the area where you wish to invest..
Our real estate agency at Cannes Amanda Properties, is specialized in luxury real estate on the French Riviera and in Bali with over 35 years experience. We advice for free and select the best opportunities in our area.
The article above is based on the french law published in January 2024. Most information comes form the governmental website. This article cannot be considered as fiscal advice on its own. If you wish to know more about this subject, please contact our real estate agency Amanda Properties.
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