French Leaseback Property
By Grace Turner
What is is?
In the early 1980 s the French government introduced LMNP (loue meuble non-professionel) or Leaseback Property, in order to increase the amount of holiday accommodation on the market.
The properties are purchased for investment. They offer long-term, rental income and tax benefits. Capital appreciation can happen but rental income should be predominently the main reason for purchase.
The way it works is you “lease back” your freehold property to a property management company for a pre-determined time period (usually 9 to 11 years, but can be as long as 18). The property management company furnish and let the property. The income from rental is usually between 2.5% and 6%. The figure depends on location, the property, the rates agreed in the “lease back” agreement and if you wish to use the property yourself for holidays.
Points to remember
It is important to use a reputable property management company.
Remember to check the contract carefully if you wish to use the property yourself the amount of personal usage varies from company to company.
At the end of the fixed term you can either exit the lease or renew it.
Tax advantages
There are some great tax advantages.
If you keep your property for 15 years, you will not have to pay any capital gains tax.
Leaseback property qualifies for a 19.6% VAT rebate. This means that if your property costs
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