The Advantages and Disadvantages of French Leaseback Property
25 February 2011
French leaseback property is a low-risk long term investment that allows buyers to purchase a property, which is then leased back to the developer. The developing company will take charge of all maintenance and management costs and rent out the French leaseback property to tourists, guaranteeing the buyer a steady income. There are many advantages to this type of property, but of course a few pitfalls as well. Here are some of the advantages and disadvantages of owning a French leaseback property:
- The French government offers a huge tax break of 19.6% VAT on all French leaseback properties.
- The scheme does not require a lot of work or time from the investor. The management company takes care of all maintenance, upkeep and rental details without any involvement from the French leaseback property owner.
- The property owner can choose to stay at the property for free during their holidays for several weeks of the year.
- After 15 years of ownership, a French leaseback property becomes exempt from French Capital Gains tax.
- There is a risk involved, as the success of a French leaseback property depends on the reliability of the company managing it. If they are untrustworthy or go out of business, the investor loses their guaranteed rent. Beware of companies that offer exaggerated rental returns, it is unlikely that they will be able to sustain them. Remember: if it sounds too good to be true, it probably is.
- The scheme offers little guarantee of short term gain. For those looking to quickly flip a property and make an immediate profit, French leaseback property is not the way to go. Instead, it should be looked at as a long-term investment that will offer rewards overtime.
Many investors are finding success through French leaseback property. Would you like to find out how? Contact Select Resorts today for more information.