you will be taking holidays in it. Different management companies offer different rental incomes.
Buying property in France
When buying French leaseback property it is important to check the contract to ascertain the amount of personal usage allowable per year, as this can vary.
At the end of the initial fixed term and depending on the contract, you can either: exit the lease or renew it with the management company. At this point you should be able to negotiate your rents upwards. It is very important that you check the terms of the contract and the reputation of the management company.
Whilst capital appreciation can occur, leaseback should principally be viewed as a means for receiving a guaranteed rental income (yield).
French leaseback property tax advantages
French leaseback property attracts significant tax advantages. Under the terms of the scheme, leaseback property qualifies for a 19.6% VAT rebate, for example, if the price of your leaseback property is €100,000, the VAT saving means that you only pay €83,612. Additionally you can benefit from not having to pay any capital gains tax if you keep your property for 15 years.
Another major benefit for investors who do not take any personal usage is the possibility of it being placed within a SIPP (Self Invested Personal Pension). Whilst it is dependent on the SIPP manager whether or not they will accept the property, placing property within a SIPP attracts major tax advantages. See our SIPP property section for a further explanation of the associated tax benefits.
Ewan McGarrie writes about French leaseback property and related items at www.propertyinvestment.co.uk/
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