Travelling Provence France

All About Leasebacks in Provence

Leaseback Schemes in Provence–What they are and how they work:

A leaseback works on the principal that you purchase a property that is fully furnished, which you then lease back to either the developer or a qualified management company for a minimum of 9 years. Designed to encourage investment in tourist residences, a leaseback property benefits from a government-backed VAT-refund. How does this work?

The management firm will sublet the property on a short term basis, offering services such as cleaning and breakfasts, which mean that the property qualifies as a letting business (like a hotel) and so the rents charged by the management firm are then subject to TVA (purchase tax). The French government agrees in these cases to offset the TVA charged when the property is purchased against the TVA charged on the short-term rentals.

To qualify for the leaseback purchase tax claw back, the property has to be let out for a minimum qualifying 4 weeks a year. Investors have the option to choose a leaseback formula that includes weeks of stays at their property, which they can use at their own discretion. In the case of leaseback schemes with guaranteed returns, the letting agent usually has the property for the bulk of the year, the owner having its use for 0 - 6 weeks depending on the scheme. The notaire’s fees on leaseback or any new build are only about 2-3% as there is no transfer tax (as opposed to the normal 7-8% where transfer tax is 5%),

Leaseback properties are available in many parts of France, including the Côte d’Azur and Languedoc area. The types of locations where leaseback properties are available vary, but often they are built in and around alpine/skiing, coastal or golf/sporting areas. You can own as many leaseback properties as you can afford, and you do not need to be a French or EU resident to own one. You can sell the property at any time, but if the property is sold before the end of the leaseback period, the remainder of the lease’s term would still be applicable and the outstanding balance of the purchase tax would be payable on sale (5% of the VAT for every year from when you sell up to 20 years after your original purchase date). Read more