Introduction:
A double taxation agreement exists between France and the UK. This means that tax is paid in one or other country, not both. You should seek specialist financial advice on all matters relating to property purchase transactions. Anyone planning to move permanently from the UK to France should notify the British tax authorities before leaving, providing new employment and property details.

For tax purposes, a foreign homeowner only normally becomes a resident of France when they spend more than 183 days in the country during a calendar year, or if their permanent home is there. Even if foreign homeowners are not tax residents, they may still be liable to pay a range of taxes in France.

Taxes in France are paid in the year following the tax year in question, which runs from 1 January to 31 December. Residents' taxes are collected by the Direction Generale des Impots, while non-residents deal with the Centre des Impots des Non-residents in Paris. A tax return form ("declaration des revenues") can be obtained from the local tax office ("Centre des Impots") who will be able to help you fill out the paperwork.

Property Taxes:
The two main property taxes in France are:

• Land tax (“taxe fonciere”): Property owners in France must pay taxe fonciere.  Taxe fonciere is paid on unbuilt or built-up land, even if an owner is not resident in France. Taxe fonciere is charged annually at between 28% and 60% (depending on the nature and location of the property) on the tax base of property in question as of 1 January in the given year.  The notaire will normally ensure that the vendor and purchaser pay their fair share of the year's tax in line with their periods of ownership. 
• Community tax (“taxe d'habitation”): Occupiers must pay taxe d'habitation. The person in occupation on 1 January in any given year is liable to pay this tax in its entirety, irrespective of when he or she ceases to occupy the property, and normally there is no apportionment with future owners. If the occupier does not pay, the owner will be liable.

Both taxes are based on the average rental value of a property and apply regardless of whether an owner is a resident or whether the property is a permanent or holiday home. Tax amounts vary from region to region, sometimes quite substantially. Of the two, taxe foncière is the more expensive and can be so by as much as twice the amount of the taxe d'habitation. Retired residents may be exempt from paying these taxes, as may owners of new homes.

Income Tax:
Income tax in France is divided into earned income (“impot sur le revenue des personnes physiques (IRPP)”) and unearned income (“impot des revenues des capitaux mobliers”):

• Earned income: The rate for 2006 is 20 per cent although there are a number of allowances from which you can get tax relief. There is also a separate rental income tax (“contribution sur les revenues locatifs”) which is levied on gross rental income.
• Unearned income: This is a tax on investment and is payable on property and investment income as well as interest paid on bank accounts.

French residents are taxed in France if their main income arises in the country, their principal activity is in France, or if France is the country where most of their substantial assets reside. As at 2006, annual income of less than 5,515 euros (approximately £3,748) is not taxable. Income of 5,516 euros (approximately £3,749) to 65,559 euros (approximately £44,544) is taxed in bands of from 5.5 to 30 per cent. Above £44,545, 40 per cent is payable.

Utility Costs:
Most French home utilities are state run which makes getting connected a fairly simple process.

Most of France 's power (supplied by Electricite de France (EDF)) comes from nuclear reactors and hydro-electric plants, and is among the cheapest in Europe. Hence, most home heating and appliances run on electricity. Mains gas is supplied by Gaz de France (GDF) and is part of EDF. Both utilities are usually billed together.

Water is privatised and supplied by Generale des Eaux. It's expensive wherever you live, although there is a wide variation in charge rates from region to region. Mains drainage in particular is expensive in remote areas, explaining why many rural homes rely on a simpler, cheaper system of having a septic tank. Be sure to avoid paying anyone else's charges by having the meter read before you move in.

Lettings & Management Charges:
Full property management services with insurance backed rental guarantees are available in France for around 12.9% of the rental amount per annum.

Maintenance Costs:
New build properties in France are guaranteed for 10 years so maintenance costs are limited. Old property, by contrast, will incur significant costs as labour is expensive.

Specialist companies can offer property checks for non-resident owners, sending someone round regularly to see if there has been any damage to the property and to check, for example, if any pipes are leaking. A cheaper alternative is to get to know the neighbours and get them to do this for free.

Other Ownership Costs:

• Wealth tax: Both residents and non-residents may be also be liable to pay wealth tax (“impot de solidarite sur la fortune”) on assets (including property) above the value of 750,000 euros (approximately £509,700) held in France if resident or with assets in France on 1 January of any year. The tax rate commences at 0.55 per cent, rising to 1.80 per cent on assets above 15,530,000 euros (approximately £10,554,190). Wealth tax cannot exceed 85 per cent of your net taxable income. The tax can be minimised if you buy a property through an SCI, or property-holding company. The net worth of the property can be reduced by way of a mortgage or borrowing on the property or a debt.
• Corporate income tax: Corporate income tax (CIT) is charged at the standard rate of 33.33% and is payable by both resident and non-resident entities.  A further contribution of 3.3% of the annual CIT charge is payable if the corporate income tax liability of the company exceeds €763,000 before the deduction of any tax credit.  The effective rates of corporation tax are therefore 34.33% or 33.33%.  Profits are taxable on an accounting year basis.

Sources & Resources:

• BuyAssociation
• Davey, Charles - The Complete Guide to Buying Property in France
• De Vries, Andre - Buying a House in France
• www.deloitte.com
• www.globalpropertyguide.com
• Kalin, Christian H. – International Real Estate Handbook
• Kristen, Clive - Buying a Property In France – An insider guide to realising your dreams (2 nd edition)
• Merricks Media Ltd - Red Guides: Buying a Property in France