Seller’s guidebook
In France, it is becoming more and more complex to sell a property. The legislation has been made even more rigorous to protect the interests of the vendor and the buyer.
The right questions to ask yourself when you want to sell your property.
How should you value your property ?
When you have decided to sell your property, first of all you have to determine its value.
There are 2 ways of doing this.
- Yourself by (carefully) researching sale prices on similar properties.
- Using a professional and entrusting the valuation to an expert (estate agent, notary…) who will have an objective view on your property.
An accurate estimate of your property’s value in relation to the surrounding market is invaluable for selling it under the best conditions and/or faster.
Don’t forget to have your property’s energy survey carried out by an expert, this survey is mandatory and should feature in your property’s sales advert.
Should you sell privately or through an agency? Pros and cons
When selling a property, you have the choice of two options.
Selling your property independently
If you are naturally independent, selling your property yourself may seem an attractive option and, in addition to word of mouth, there are a number of tools around to help you (classified newspaper / specialist magazine ads and above all, the Internet). The advantage is that you are addressing private individuals who believe (sometimes mistakenly) in doing business without using an intermediary.
However, selling your property yourself requires time and expert knowledge of the property market. In reality, you will have to answer calls and emails from potential buyers, organise viewings, collect the various required administrative documents, draw up contracts… All of this involves an enormous amount of work. What’s more, you are exposing yourself to the risk of making mistakes. Be aware that around 20% of transactions carried out between private individuals end up in court, usually for legal reasons.
Employing an estate agency
As an official intermediary between the vendor and the buyer, an estate agency takes care of everything; checking the condition of the property and determining the price, managing viewings, creating and publicising adverts, administrative documents, estimations for repair work to be done… An agency will also play the role of an intermediary between you and the buyer during the negotiation process. It will draw up the sale and purchase agreement, then do what’s required to turn it into a final, notarised deed of sale. It’s an all-inclusive, hassle-free sale process that leaves your free time and work time uninterrupted, while your property is viewed by as many buyers as possible.
Using an estate agency is the right choice. Estate agents know the area well and can find potential buyers efficiently. What’s more, they also have a clear view of the market and will be able to value your property as accurately as possible.
Agency commission is unregulated and in the vicinity of 7-8% incl. tax in Val Thorens.
What different agency agreements are available? Pros and cons
To successfully complete your transaction, the estate agency will ask you to sign a mandate of sale. The mandate is a contract signed by the vendor and the estate agency, authorising the latter to put a property on the market according to the conditions specified.
Agencies offer a choice of 3 different mandates.
- Non-exclusive agency agreement: this allows you to put your property on the market via several estate agencies at the same time and also to try to sell it yourself. This can lead to several professionals working on your property at the same time, which is attractive in terms of the visibility it will receive. But it can also undermine that visibility by spreading the property too thinly, which can lead to buyers thinking that it is difficult to sell. Also note that with this type of mandate, it’s your job to coordinate all the various individuals involved…
- Exclusive agency agreement: you engage the services of a single estate agency for an agreed period. During that period, you are forbidden from selling your property yourself unless you pay the estate agency compensation equal to the commission as agreed in the contract. Your property, available through a single agency, will stand out from those that flood the market, making it appear more valuable.
- Semi-exclusive agency agreement: you may only engage a single estate agency, but also reserve the right to sell your property via your own means.
What is the ALUR law ? What impact does it have on your sale ?
The ALUR law, in force since the 27th of March 2014, requires vendors to provide buyers with mandatory information.
When the property is put on the market, the ALUR law requires mandatory information to be included on listings relating to the sale of any unit or share in a commonhold unit no matter what the usage of said unit, whether it is located in a total or partial habitation building.
This mandatory information is: the fact that the sold property is subject to commonhold status, the number of units in the commonhold property, the average annual share of the provisional budget payable by the vendor corresponding to current expenditure, and whether or not the commonhold association is subject to any legal proceedings relating to commonhold issues.
The ALUR Law expressly states that when certain of these documents “are not appended in accordance with article L.271-1 of the building and habitation code, the withdrawal and “cooling off” period may only start from the day after the buyer receives these documents.” This must be carried out according to the terms of notification as described in the indicated article.
The commonhold association is obliged to provide estate agencies and notaries with the documents required to pass on to the future buyer of a unit in the commonhold property (overall financial report, accurate statement of current costs and provisional off-budget expenses, total amount of outstanding debt, information notice relating to the joint-owners’ rights and responsibilities).
What documents do you need to show as vendor during the sale ?
Documents required for the sale of your jointly owned apartment :
Technical survey reports.Energy performance survey (DPE),
Electricity survey,
Surface area (Living Space),
Asbestos survey,
Natural, geological and technological risk report (ERNMT).
The ALUR law, which came into force on the 27th of March 2014, (access to renovated accommodation and town planning) requires new documentation to be provided when the sale and purchase agreement is signed (commonhold file, surface area certificate, information notice, building survey).
Building organisationCommonhold regulations and amendments,
Building maintenance records,
Description of the division of the building and amendments,
Minutes from the last three years of Commonhold Association general meetings, if the vendor has them.
Total charges in the current budget forecast,
Total charges paid by the vendor outside the budget forecast over the last 2 accounting periods,
Sum of the shared building costs (where relevant) relating to the principal unit sold and the sum of the previous contribution to funds paid by the vendor relating to the unit sold.
Any amounts that the vendor may still be due to pay to the commonhold association,
Any amounts that the buyer must pay to the commonhold association,
General statement of the commonhold association’s outstanding payments and debts to suppliers.
The unit vendor (or the notary looking after the sale in their absence) must ask the Commonhold Association for a commonhold unit information certificate specifying the commonhold assessment (contributions relating to the unit being sold). This document summarises, subject to the balancing of accounts, any debt the vendor owes to the Association.
In the same way, this document also indicates any sums by which the Commonhold Association may owe to the vendor (advances) as well as any sums payable by the buyer.
Please note: charges for compiling the unit information certificate are payable by the vendor.
Commonhold Association certificateBefore signing the sale and purchase agreement with the notary, the vendor must present a certificate from the Commonhold Association issued no longer than one month earlier, proving that the vendor is free of any obligations regarding the Commonhold Association.
Capital Gains. What impact does it have on your sale? Does it affect non-residents?
Means of calculating Capital Gains.
Calculating gross Capital Gains
Gross Capital Gains is equal to the difference between the sale price and the acquisition price.
- Sale price = price stipulated in the deed of sale, plus charges and costs paid to the vendor, minus sales charges already paid (sales commission, mandatory surveys and survey cost, eviction costs, architect fees for building plans required to obtain planning permission, costs incurred by the vendor for breaking a mortgage on the property sold).
- Acquisition price: purchase price or, for “gifted” properties, fair market value at the time of the previous transfer of ownership, plus:
- Acquisition charges (7.5% flat-rate or proven real costs): Transfer tax or VAT, notary fees, intermediary commissions, transfer duties for “gifted” properties, and legal fees ...).
- Building work, repair work, extension, renovation or improvement work not already deducted, whether by their actual sums (if these can be proven) or a fixed sum at a flat rate of 15% of the acquisition price.
- Roads, drains and utilities maintenance charges imposed by regional authorities, with the required evidence.
Calculating net taxable Capital Gains
Only the net Capital Gains are taxable. Its amount is determined by applying the reductions below to gross Capital Gains, for transfer of property carried out after the 1st of September 2013.
- Concerning income tax:
- No allowance for the first five years of ownership
- 6% allowance per year between the 6th and 21st year of ownership
- 4% allowance per year from the 22nd year of ownership onwards
- Concerning social security contributions:
- 1.65% for each year of ownership between the 5th and 21st year
- 1.60% for the 22nd year of ownership
- 9% for each year beyond the 22nd year
Property Capital Gains earned after the 1st of July 2012 is taxed at 19% on income tax + 15.5% on social security contributions, coming to a total taxation of 34.5%.
Situation for non-residents: in accordance with international agreements, tax-paying natural persons resident outside of France in European Economic Area member states are exempt from social security contributions, but are subject to payments at a rate of 19% (33 1/3% for non-resident natural persons living outside the European Economic Area, or 75% for those resident in a state or territory that does not have an agreement with France) from the time they sell property, built or not, or rights relating to this property in France, for a cost. Specific exoneration is granted to property transfers in France by non-resident natural persons living in the European Economic Area, on condition that they can prove tax residency in France for a period of at least two years and that they were in possession of full property rights at least since the 1st of January of the year preceding the sale (rental properties are thus excluded from this exoneration). This exoneration is limited to a single residence per taxpayer.