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How Does It Work Buying Process Financial Projection Taxes FAQ
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How Does It Work |
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Leaseback specifics
- The leaseback,a long term guaranteed investment : Either you take it as a retirement plan or you have a vacation spot that is yours and brings you income while you are away or you have an apartment paid off for your children to study abroad or you simply balance your investment portfolio
- The leaseback properties are located in the best locations in terms of capital-gain potentials and mostly on the French Riviera, in Central Paris and best French ski resorts, Loire Valley and on the west coast (Normandy, Brittany, etc.) .
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Management company
- The leaseback is an investment program (call in French LMP/LMNP) where you buy a property (full ownership) usually a condominium and then lease it to a management company for a minimum of 9 years (the management will sub rent your property to their clients). In exchange the management provides a guaranteed rental income for 9 years (index each year with the inflation). It is the management company problem to rent it and keep it at standards (rented or not you will have your rental income).
In return for a lease-back contract to a management company the buyer gets major tax breaks from the French administration (refund of the value-added tax (VAT, 19.6%) and income tax deduction).
- The lease paid by the management company is net of:
* Dwelling tax
* Management fees
* Monthly condo association charges
* Water and electricity charges
* Heating and air conditioning costs,
* Furniture replacing
* Upkeep of the apartment as a whole
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Why is this different to time share?
A leaseback contract may sometimes provide to occupy the property yourself free of charge for a period of 2 to 6 weeks per year. In many cases you will be able to use your free occupancy weeks in other resorts managed by the same management company (on the French Riviera in summer and in the Alps ski resorts in winter).
If you do not want to do so you can allow others to occupy the property on your behalf or, surrender the right in return for a higher payment from the company.
Only approved companies can offer leaseback plan and those that do are usually subsidiaries of leading French companies of major size (banks and insurance group), status and scope. The guarantee from them is, therefore, worth having.
The scheme does not have anything to do with timeshare. You buy a freehold apartment and you are the legal owner from day one. It is registered in your name in the French land registry.
At the end of the leaseback period, the property is yours to do with as you please. You can continue to rent it out, use it yourself or sell it or possibly start new lease.
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