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Potential changes to the French inheritance tax system are set to provide a boon to British investors looking to purchase property in the country, according to estate agent Unique Living.
As part of a package of reforms proposed by new president Nicolas Sarkozy, the inheritance tax threshold in France will be trebled.
This means only the top five per cent of properties are likely to be liable to pay the tax under the new régime – and as a result overseas investors are unlikely to pay any tax.
"As a company selling in France this is certainly good news," said Serge Cowan, managing director of Unique Living International Estate Agents.
"This will boost interest even further in investment in France, a country much loved by the British."
Homeworldwide.com is urging investors to take out mortgages in France in euros, to insulate cash from any potential deterioration in exchange rates as a result of falling interest rates.
Yet, the tax changes could outweigh these concerns.
"Most buyers now know that they can invest in France without fear of having their estate taxed when they die," concluded Mr Cowan.
"This has to be a great comfort and will naturally encourage further investment in this most charming of countries."
France may never be better value than it is now . Prices are steady at present but liable to go sharply higher as spring approaches due to borrowing in France is cheaper than ever for French tax payers because of new MIRAS-style tax breaks taking effect, as well as inheritance tax changes, which have freed up the market. Now is definitely the time to snap up an investment !
This advice is backed up by recent research, by the University of Paris – Dauphine (Economics); which shows that nearly half of house hunters looking to buy in France are still attracted by the good value property prices.
France has traditionally been a country that has offered overseas investors excellent value for money along with the safety and security so many are looking for, with low crime figures especially in rural areas. The survey shows that this French reputation for good value property still holds true, now more than ever.
In France, the situation regarding fixed rate mortgages is quite different – the French have always preferred and, indeed, still prefer a fixed rate for the entire term of the loan, which could be up to 30 years, depending on the age when the mortgage is taken out. And this is despite French banks encouraging them to take out a variable rate mortgage, or what in France they call ‘cape 2%’, which is similar to the UK and less risk for the bank.
It must be said that French people do not move as frequently as the British and US and they tend to plan for the longer term. They do not like interest only mortgages and prefer to pay off the capital - a very different mentality.
We saw levels of interest right up until the end of 2007, showing that the slowdown in the other market does not seem to have impacted upon the strength of demand. January figures show a 70% increase in investment over 2007 and the market seems to have escaped the worst of the sub prime fall-out in the USA.
There are three good reasons (Particularly is your base currency is £ sterling) why, if you are considering buying property in France, you should act now.
Interest rates in the UK are falling and if you have spare cash it will be eaten away by inflation as real rates of return fall.
Property prices are forecast to rise across France in 2008 by an average of 5% but in the Limousin house prices (Which are the lowest in France) will rise faster than this as they are starting from a lower base. The flip side of this is that if you have money invested in UK property, it is forecast to fall in value in 2008 and has started to do so even now.
The pound is weakening against the Euro as interest rates in the UK fall. They are forecast to fall further during 2008 as the Bank of England attempt to stimulate the UK economy.
All the above factors point to one solid conclusion – now is the time to buy your French property - waiting will cost you money. So make 2008 the year you buy your house in the Limousin and take the first step by contacting us now – You won’t be disappointed
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