We appreciate receiving questions from our readers, as this gives us all the opportunity to learn more and to share our experiences. A reader asked us the following question recently:
Q. A private seller has suggested that one way to reduce buying fees or notaire fees is to declare part of the price of the property as an amount to buy the furniture. Is this legal?
A. On the purchase of a property in France, the land registry portion of the frais de notaire applies to the value of the property itself, the valeur immobilier. It is not unusual to find that the house is sold on a barebones basis; even the free standing kitchen cabinets could be gone by the time you move in. If you are interested in keeping any of the furnishings, for example a washing machine or lighting fixtures, these need to be expressly and separately negotiated.
Let’s take an example for the purposes of this exercise. Figures can vary slightly by department and type of transaction so this is just a guideline. Let’s say a house is offered at €300,000. The owner is willing to throw in a beautiful solid oak dining room set and upscale leather sofas, plus other items worth about €20,000. On the acte de vente the valeur immobilier of the property can be set at €280,000 and declare that the transaction includes the purchase of mobilier for the amount of €20,000. There needs to be an itemized list detailing their estimated value. The calculation should be realistic and allow for reasonable depreciation. In this example the value of the mobilier items set at €20,000 would mean that land registry fees would not apply on this portion, only on the value of the property of €280,000. With fees coming in at around 5.5% calculating the value of the furnishings separately would constitute a savings of around €1,100.
It’s always a good idea to use the services of a qualified estate agent as they would be able to advise you about any potential complications. Although rare, a suspicion that the value of the furnishings has been inflated could trigger an audit by the administration fiscale. It is not necessary to have the original receipts for the items, although it helps, but there has to be a reasonable basis for the calculation of the current value at the time of sale. Additionally, a bank loan would not apply to the furnishings, so if you were financing the property you would need to have the funds to cover the mobilier part of the contract available in cash.
Photo by frenchfinds.co.uk via flickr
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