Luxury Tax law

Home searching in France: a hovering Parisian loft with Gustave Eiffel ceilings

January 7, 2021

This refurbished industrial loft, built in 1900 in the Charonne district of the eastern 20th arrondissement of Paris, served as a truck garage and acoustic speaker factory before being fully renovated and converted into a residence by its current owner in 2011. The 2,530 square meter room with two bedrooms is bordered by its towering glass roof by Gustave Eiffel, which bathes the large living room in sunlight.

“This is really what takes your breath away when you step into the loft and add natural lighting to the entire place that is truly extraordinary,” said Margot Royer-Boquillon, an agent at Paris Marais Sotheby’s Realty who owns the listing . “It feels like stepping into a work of art.”

The front door of the building leads to an entrance hall with a modern Murano chandelier by Venini. Straight ahead is the 1,065-square-foot room, with 23-foot ceilings that vault over a living area, dining area, library, and corner for a grand piano. (The seller is a composer, Ms. Royer-Boquillon said.) There is a toilet and cupboard nearby, and a door to the right leads to the kitchen with oak countertops and Smeg appliances.

At the opposite end of the large room is the master suite with a glass wall made of doors that were converted from a military school in Versailles. “Turning those doors into a wall seemed like a real problem,” said Ms. Royer-Boquillon.

From the main room, a wide opening leads to several rooms at the rear of the house including a study, a second bedroom with an en-suite bathroom, half a bathtub, and a large second living room with loft that was once a greenhouse through a newer glass roof. A large basement is also included.

The house is full of art, said Ms. Royer-Boquillon, including works by Salvador Dalí, Joseph Beuys, Jean-Charles Blais, Maynard Dixon and Pierre Alechinsky, all of which can be included in negotiations.

The accommodation is located in the Charonne district of Paris on the eastern edge of the city, which despite its location in a densely populated urban area retains a village charm. The Père-Lachaise Cemetery and Place de la Nation are within walking distance. Paris Charles de Gaulle Airport is around 30 minutes north.

While the Covid-19 crisis plunged France into recession, the property market has stayed afloat as supply shrinks and transactions plummet.

According to a report by the Notaries of Greater Paris on December 17th, 41,000 existing homes were sold in Paris from August to October 2020, a 13 percent decrease from the same period in 2019, with apartment sales falling more than house sales.

As nervous sellers withdrew their homes, the decline in activity pushed prices higher. The French Association of Notaries reports that the prices for apartments that are more than five years old rose by an annual average of 6.6 percent year-on-year at the end of October. The average price was $ 1,230 per square foot.

After two severe state-wide bans, the definition of desirable housing has expanded to areas outside of the city where there are more houses with gardens and terraces. Since prices fell slightly in the centrally located third and eighth arrondissement, for example, they rose in the eastern and western suburbs.

The strong blue chips in the central and western arrondissements of Paris – 1, 2, 4, 5, 7, 8 and 16 – are always in demand, said Alexander Kraft, chairman and managing director of Sotheby’s International Realty France. But the region west of the city has experienced a “renaissance” in the midst of the pandemic thanks to its larger rooms and houses with open outdoor areas.

An ongoing expansion of the Paris Metro will expand commuting options from remote areas and encourage shoppers to move out of the city center, said Kathryn Brown, director of operations at Paris Property Group, a luxury agency. “So you can live outside of Paris and have a house and a yard,” she said. “And the price per square meter is about half what it is in Paris.”

France’s rigid lockdowns have accelerated this trend. “I think Americans don’t really understand what it feels like to be in your apartment for two months, eight solid weeks, 23 hours a day,” Ms. Brown said. “We had to have timed and dated permits.”

Smaller and cheaper properties in Paris – those priced below € 750,000 – are being sold “instantly and at full price”, while larger, higher priced properties “typically bought by wealthy foreign buyers have become more negotiable. ”

Even so, luxury real estate officials said 2020 was a robust year despite the reduced sales volume. Charles-Marie Jottras, CEO of the Daniel Féau Group, a luxury real estate agency, said real estate sales of around EUR 1 to 1.5 million (US $ 1.2 to 1.8 million) in 2020 will increase by around Down 10 percent while prices rose about 10 percent 5 percent, with most of that growth being seen in the first half of the year.

“We have sold less, but we see that as soon as the detention ends, sales will rise sharply,” said Jottras. “That means people want to buy. They couldn’t materially do it while staying at home, but now they can, and we have a very, very big increase in sales after the second delivery. “

Mr. Kraft said the market performed “much better than expected” under the circumstances. Paris is still a sellers’ market, he said, “provided prices are realistic.” High-end properties in good condition, especially those with outdoor areas, are in demand, while homes in need of renovation or less desirable areas are not being sold. “In the end, our results for 2020 will match those of 2019 (a record year), despite 3 months of forced inactivity during the lockdowns!” he wrote in an email.

Pierre-Alain Conil, partner of Morel d’Arleux, a Parisian notary, said he worked with far fewer foreign buyers in 2020 than in previous years and almost none for pieds-à-terre. “I know some are still thinking about when the pandemic will be over as the market has proven strong, making it a very safe and conservative investment,” he said.

Mr. Kraft saw a similar trend in Paris and across France. “Usually foreign buyers make up at least 50 percent of our customers,” he said. “In 2020 it was only 7 percent.” The agency received many inquiries from overseas, but “few international buyers pulled the trigger because they were unable to visit properties in person.”

According to a July 2019 report by private finance firm BNP Paribas, the last available, most foreign buyers in France came from the UK, followed by Belgium. In the Paris region, “the Algerians (9 percent) led the way in 2018, followed by the Americans and Chinese, who are level with the Italians (8 percent each).”

Foreigners can buy real estate in France without restrictions. According to the law, transactions are carried out by notaries. Lawyers are often hired on expensive transactions that can pose more complex tax problems, Conil said.

Foreigners can get mortgages for around 60 to 70 percent of the purchase price, he said. Americans who take out loans from French banks can deduct the loan amount from the value of the property for property tax purposes. Real estate finance loans, he added, are always covered by mortality insurance, which may be more difficult or expensive for older customers.

Mr Kraft said that obtaining a mortgage as a foreigner “tends to be more complicated than for domestic buyers” but noted that “specialist mortgage brokers are available for foreign buyers”. He added that the broker’s commission is usually paid by the seller and is included in the sale price.

The closing costs are around 7 to 7.5 percent of the purchase price, including stamp duty, purchase tax and the statutory notary fee. For newly built properties or new homes sold off-plan, the closing costs are lower: up to 3 percent of the purchase price, Conil said.

French; Euro (1 Euro = 1.22 USD)

The annual property tax on this home is approximately $ 1,340 USD. The fees for condominiums are around 2,200 euros per year.

Margot Royer-Boquillon, Paris Marais Sotheby’s Real Estate, 011-33- (0) 6-31-63-90-34; sothebysrealty.com

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