How to Get Money From the French Government

Friday, July 18, 2008

Read more about the French Leaseback Program in International Living Postcards —your daily escape

Dear International Living Reader,

Governments the world over are not generally given to generosity. What with sales tax, income tax, and all the various property taxes, it's hard not to see them as big money-grabbing organisms. But I've found an exception. And, surprisingly, it's in Europe. I've learned how to get the French government to pay back almost 20% of a property investment--and still enjoy guaranteed rental income from that same property.

It's called the leaseback program, and it started in 1986 to make more quality vacation rentals available in France and improve tourism. How it works is almost child's play.

You buy a property in a recognized vacation resort or résidence tourisme, and you let a management company to use it as a short-term rental for a fixed period of time, generally nine to 11 years. After this, you can sell it or renew the agreement. The great advantage for you is that you'll see guaranteed rental income (typically 2.5-6% net, index linked) in your bank account for the duration of the agreement, and, if you buy off-plan, you get back the 19.6% sales tax on the purchase price. And there are no management fees.

In some programs you can opt to use the property yourself for a number of weeks per year, but you forfeit the rental income for this period of use. And as with other property acquisitions in France, there are no restrictions for foreign buyers. For hassle-free rentals, it's hard to beat leaseback.

In Paris—and the immediate suburbs—the leasebacks available are mainly student or business residences. One real estate agent is selling apartments in a business leaseback residence in the western Paris suburb of St. Cyr near Versailles, from 91,000 euro ($145,000) with returns of up to 5%. A three-star tourism residence in the country 20 minutes' from the business district of La Défense is also available, set in the grounds of a renovated castle with a 9-hole golf course. Studios start from €91,000 ($145,000) with returns of 5%, and this gives you the right of up to six weeks' stay at a 20% discount.

But the best returns I've seen are in a business residence in Villeneuve-la-Garenne just over 5 miles north from the heart of Paris. This district has attracted a number of big businesses, many of which are just a block away from the leaseback, and I feel sure that it will do well. The developers seem to think so too, as investors will have a commercial lease of 11 and a half years minimum—and renewable—with a guaranteed return of up to 5.45%. This is the highest rate I've seen so far in the Paris region.

Magazine subscribers can find out the contact details of the real estate agent selling these properties here. Not a subscriber? Follow this link to sign up today.

Leigh Fergus
Europe Editor, International Living

Editor's note: The French Leaseback Program is one of the safest and easiest investment you can make...you just need to sit back and let the money roll in. Find out more here.

Read related IL Postcards:

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