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From January 2007, a new law effectively boosts the value of leaseback properties for investors who decide to sell. Leaseback is a French government incentive designed to encourage tourism. Introduced in the 1970’s, it allows purchasers to buy a freehold apartment and then lease it back to an approved management company to let for a 9–11 year term.
Under the law as it previously stood, the payment of VAT on the purchase (19.6 per cent) was waived. The drawback was that if the property was sold on before twenty years had elapsed, the seller was obliged to repay the French state a proportion of the VAT, calculated at one per cent per annum.
The good news is that under the new law and subsequent recent revisions, the vendor is no longer required to repay any VAT at all when selling their leaseback property; the only condition is that the residence must be classified with an official tourism star rating, and that the leaseback arrangements remain in place.
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