Buying property: plan before you buy

People settling in France have long been attracted by the idea of the roses-round-the-door cottage and the happy-go-lucky wine-fuelled lifestyle. Many of us who have lived here for a while know that this is a difficult dream to achieve. It’s a lot more difficult now that the financial crisis is really biting.

But over the past months I have noticed a new realism among N European settlers in France. They are looking for property with immediate revenue-producing capability: a gîte or chambres d’hôte already up and running and bringing in money to cover costs and maybe generating even enough to invest in upgrading the property. Banks rarely fall for this sort of income when they’re considering a mortgage …unless, unless … the vendor has had the good sense to keep proper accounts and can provide the prospective buyer with accounts going back over at least five years. All the better if these accounts have been drawn up by an expert comptable.

So there are lessons here for prospective vendors as well as buyers.

All property owners in rural France need an exit strategy which should, ideally, be put into place even before buying. There are so many unforeseen events that can strike suddenly - divorce, loss of a spouse, loss of a job, car accident - that can precipate a change of plan and, often, the sale of the property. Having verifiable accounts relating to gîte and B&B income is an obvious first step. Tax declarations showing the importance of this income are even better.

Now that second-home capital gains are being taxed at a ferocious 32.5% a bit of forward planning is needed even before buying. I reckon the simple SCI will come back in a big way as a vehicle for holding property abroad.

I’d be interested to hear members’ views on whether they keep accounts of their gîte and B&B income.

I keep accounts for everything, but not via an accountant. I’ve got spreadsheets from the day we bought this place, every invoice for every thing we’ve bought for renovation and a cash book for the Gite and Chambre d’hote. We’re just about to ask an agent to come and value our property and try and market it to sell, no idea what he’s going to say and then we have to find our next “dream home” and start again -this time without so much renovation we hope.