Premium bespoke mortgage loans for international investors
When considering a property purchase in France, international non-resident clients will be exposed to investing in a country they are not familiar with. They will encounter issues of varying nature, requiring explanations and solutions. RFP is the ideal partner to understand these issues and bring competent advice and coherent solutions.
The 4 investor issues
When buying a property, investors have 4 types of issues to consider. Dealing with them efficiently is paramount, especially when amounts invested are substantial:
1. Finding the property
That's the expertise of the real estate agent.
2. Understanding tax consequences and minimising its financial impact
Which taxes apply to investors (capital gains tax, wealth tax, inheritance and donation tax) and how to optimise the investment. If these questions are usually relatively easy to answer, they can become much more complicated for international clients who have to deal with French law, their home-country law, double taxation agreements, international and European treaties and regulations. This is the task of a tax specialist or a tax lawyer.
3. Who should buy?
Is it more relevant to buy in one person's own name, together with the spouse, split the ownership and usufruct, or use a company ? In this last case, what kind of company, with which shareholders or associates, which statutes, etc. This is the mission of a lawyer or a notaire.
4. How should they finance?
Buying a large property with a mortgage can have several advantages for the investor. This is the task of a financial advisor able to understand and take into account international clients’ fiscal and legal specificities. Ask RFP.
The 7 reasons that can make bank financing relevant for an international investor
- The investor doesn't have enough funds (of course)
- The property investment is intended as « buy to let »: interests and other mortgage related costs can be deducted from the rental income, minimising real estate taxable income in France
- Interest rates are low and the client knows how to invest his/her personal funds with a higher return than the cost of the loan.
- The investor wishes to minimise French wealth tax. For information the tax rate is gradually increasing from 0.5% to 1.5% of the real estate asset value, located in France. For example, this tax amounts to €15k for a French real estate valued at €3m, €50k for an estate valued at €6m and €100k for an estate valued at €10m
- When the foreign owner of a property in France passes away, his/her heirs will have to pay inheritance tax in France on the basis of the net value of the real estate assets. For example, for direct heirs, the rate will be 20% for assets between €16k and €552k, 30% between €552k and €902k, 40% between €902k and €1 805k and 45% above. For investors living in a country where inheritance tax is nil or lower than in France (and there are many!), a way to avoid/minimise this French inheritance tax is to buy with a financing that would still exist on the day of decease.
- If the investor is living in a country with another currency than Euro, investing in French real estate means taking a double risk: first on the evolution of property values over time and second, on the evolution of the Euro currency. A way to avoid this second risk is to take a 100% interest only mortgage in euros.
- The investor wishes to retain as much personal funds/equity as possible in order to invest in other opportunities and or for use in his/her business activities.
Investors often have several of these objectives and there are several strategies to attain them: with legal solutions, it could be to use of a company (but what type of company?), to split ownership between usufruct and bare-ownership, to choose a specific tax treatment(eg: French « furnished rental » tax regime), etc... with an appropriate financing strategy : a capital repayment or interest only mortgage loan, for which amount, in which currency, with which securities, etc… and often, it will be a bespoke combination of several of these types of solutions. RFP assist investors in analysing the overall situation, to arrive at the best possible compromise and put in place the most appropriate purchasing strategy.
Take advantage of the differences between the European regulations
Even if there is today a slow but real convergence between the regulations of the countries, each country still has its history of credit regulations, its financial culture. There are also the habits and old internal rules of the banks. Thanks to partners in various countries, RFP has access to different financing environments and is able to choose the one that best fit the specific profile and needs of the client.
RFP: leader in financial advisory for international real estate investors in France
We assist real estate investors in the search of exceptional loans.
Financial advisors by your side. Truly.
Our mission is to provide you with the best possible financial solution and make your investment projects in France an easier experience. Since the beginning, our values have remained the very same.
A simple process
We start with your situation to find and set up the best suitable financial solution. Our long-time experience with international clients has allowed us to develop a strong and efficient methodology to solve even the most complex cases.
