New French law to affect Brits looking to buy luxury overseas property

If you’re looking for a luxury overseas property, there are few better places to buy than the French capital, Paris.  With some of the continent’s finest flats and apartments, house prices in Paris are rising sharply offering both luxury living and an excellent investment.

Whilst Paris offers some beautiful properties, people looking to buy property in France have been warned that they may face additional taxes thanks to a controversial new law being proposed by the French government.

Paris property prices rising sharply

Recent figures from the National Institute of Real Estate Agents have shown that property prices in the French capital have risen disproportionately to the rest of the country. 

The Institute recently reported a 12.07 per cent year-on-year growth to Q3 2010 in Ile-de-France, the region that encircles Paris, compared to a 0.6 per cent growth in French real estate prices across the board.

This shows that overseas buyers looking to snap up luxury homes in Paris are likely to benefit from excellent capital growth.

New tax law may affect buyers of luxury overseas property in France

Whilst property prices in Paris are increasingly sharply, a new law unveiled recently may impact on the number of Brits buying luxury property in France.

A draft law recently announced proposes to charge a new tax equivalent to 20 per cent of the property’s rental value to non-resident owners of property in France.

The draft law has been approved by President Nicolas Sarkozy’s cabinet and will go before France’s parliament in July before, if passed, coming into law in 2012.   The bill says that second home owners, including many thousands of Brits, should help pay for French public services.

France’s finance ministry said: “Being owner of one or more second homes implies that one benefits directly or indirectly from local and national public services, like the police, legal system and national infrastructure.” 

Experts believe that the law will deter foreign buyers in France.  Property agency Emmanuel Garcin warned: “This new tax could reduce the enthusiasm of foreigners at a time when France is more and more seen as a country of adoption for people the world over.”