home loan finance blog
The arrival of a new resident in France’s presidential palace may spell good news for investors interested in the French property market. New premier Nicolas Sarkozy is pushing through a set of tax reforms that will bring in tax relief on mortgages during the first five years of the term.
To qualify for the relief, which will not be subject to a means test, the mortgage holder must be a French resident and taking out a new mortgage. According to one analyst, Trevor Leggett of Leggett Immobilize, the reforms are set to “shake up” the French housing market and benefit of both French and British buyers.
Up to 20 per cent of the interest on a principal purchase will be written off for the first five years of loan repayment, with an upper limit of 3,750 for a single person and 7,500 for a couple. An additional 500 can be deducted for each dependent still living at home. Anybody with a disability will have their allowances doubled.
According to Mr Leggett, someone with a 100,000 loan taken out over 15 years could see as much as ten per cent of the debt written off. He advises anyone who can afford to do so to take out a seven-year loan, “which would offer you a considerable saving as the interest payment would be higher and you could use the ceiling level to its full potential”.
He added: “We have never seen anything like this before in France These reforms are great news for British homeowners and housebuyers in Franceas they should energize the French housing market, causing property prices to rise and long-term investment values to increase.
“In terms of the overall French housing market, these reforms should allow considerable numbers of young people to get on the property ladder eventually, of course, this will affect the lower end of the market, which will in turn push up the rest of the housing market – as we have already seen in Spain,” he predicted.
Anthony Fernandes, director of SPC Overseas thinks the time is ripe for investors that have been considering France to take the plunge. “The next 10 years will see France play catch up to other European markets and investors can expect to see tremendous returns,” he advises.