Tips for selling your apartment in Paris
Your apartment in Paris is a big investment. Proper preparation can help you navigate the process from a position of strength. Miranda Bothe of Paris Property Group explains more.
When it comes time to sell your Paris apartment, focusing on a few key details can help maximize your return when it’s time to sell. Setting a high, but attainable price is a good first step that will help your property to go quickly with a flurry of bidders. Taking steps to minimize your capital gains tax should be another important focus. Here are some key considerations and important information to consider.
Getting the most for your property
Estimating a sales price for property in Paris begins with an extensive survey of the neighborhood and comparable properties, this involves more than just looking through current ads but also approaching fellow agents to discuss their current listings and get their input on the valuation. What you end up with, we hope, is a very accurate view of the market and how your apartment figures in there.
What is also critical to know for the estimate is any information you have on rental figures from the last years if your property has been renting regularly: the primary focus is on net income, but it is also helpful to know what your expenses have been. To the extent that you have been using the apartment substantially, or have restricted the amount of rentals, the income number should be adjusted to show it’s full potential. For many apartments, 60% occupancy and more is certainly realistic, and we would want a price that benefited from those numbers.
If you are selling the apartment fully furnished, you may want to exclude a few pieces that are personal to you, and that won’t be a problem as long as it is noted upfront. If you have a few pieces that are particularly valuable you should make that known, so that it is included that in the estimate of total sale price.
Finally, an inspection is required for all properties before they are listed. These “diagnostics” will provide the official square meter size that will be important in calculating and justifying the pricing.
Closing costs will factor into your capital gains calculations. In fact, all notary fees are deducted from capital gains already. When you bought your property if you used a property finder service, unless it was a licensed real estate agency like Paris Property Group, these fees are not deductible in France. Unlike in the US, travel expenses for acquiring the property are deductible. However, they may be deductible in your home country if you would be subject to capital gains there.
In figuring whether you can deduct any renovation costs incurred, the question isn’t how well your expenses are documented; the question is what those expenses are. What is deductible are “improvements” to the property, not all the works that were necessarily realized. Things such as electrical and plumbing work may be considered improvements while some expenses may be deemed “cosmetic” and therefore disallowed. The company that evaluates your expenses and decides if they qualify is a guarantor to the government that the right amount of capital gains was paid in the event that an audit is conducted after you have left the country. Thus, even though they technically work for you, they have opposing interests to your own: they want to minimize your deductions so as to be sure not to underestimate the tax owed. The right tax attorney can be a valuable advocate for you to get the most included.
Tip: Hire an advocate – a real estate-specialized lawyer is one option – who can help you position your expenses so that they will be deductible from your capital gain.
If you have owned the property long enough to qualify for a standard deduction, you may actually entitled to a standard deduction on the purchase price (not the sale price) of the property. So, of course, if that amount is close to or more than the deductible improvements, that deduction would prevail instead.
Tip: when buying an apartment in France it is important to save all receipts for renovation and furnishing to maximize your deductions when it comes time to sell.