No matter where you engage in a Real Estate transaction, each community has its own set of rules, regulations, and
idiosyncratic anomalies that determine the nature of the deal. There are no particular restrictions on Real Estate purchases in St. Barts by a non-resident or foreigner. However, a French conveyance transaction has
its own particular set of administrators, organizations, and regulations that may be unfamiliar to foreign buyers. We will do our best to simplify the Real Estate Transaction process for
St. Barts is a
Territorial Collectivity and an Overseas Collectivity (COM) of France. St. Barts remains part of the European Union: the island's
inhabitants are French citizens with EU status holding EU passports. The native
currency is the Euro.
To begin the process:
We recommend you begin your search for Real Estate on St.Barts by contacting the WIMCOsbh Real Estate Offices (US:
1-800-932-3222 or +401-849-8012 -and- ST.BARTS: 011590 590 51 07 51 firstname.lastname@example.org)Your WIMCOsbh Agent will accompany you throughout the entire process and serve as your
advisor, negotiator and facilitator. No fees are charged. Agency commissions will be paid
at the completion of the real estate transaction by the seller.
Making the offer / Letter of Intent
Once a property has been selected, the buyer and the seller must come to an agreement as to the sales price. The buyer must then make a formal,
written offer, known as a Letter of Intent, which must then be approved by the seller and signed by both parties. At this time, no currency is
Purchase & Sales Agreement
The formal Letter of Intent provides the green light for the Notaire to prepare a Purchase and Sales Agreement, which may or may not be subject to certain condition
precedents. At the time of the signature of this document, it is customary for the buyer to make a deposit of 10% of the total sales price. This sum will be held
in escrow by the Notaire and will be deducted from the total sales price at the time of the closing.
All real estate transactions are handled by a "Notaire," a French lawyer, specializing in real estate matters and transactions. He/she represents the legal aspect in any property
The Notaire's function is to verify the origin of ownership of a property, to properly record transactions and mortgages, to insure payment of taxes by both the buyer and seller, to verify and clear any liens on the property, etc. The Notaire is neutral in the transaction. He/she is purely a public official who charges a fee for preparing the transfer of property. In his/her neutral legal capacity, he/she is responsible for conducting inquiries leading up to completion of the transaction and is accountable to the French Internal Revenue Service for payment of the seller's capital gains tax and to the Registrar's Office for registration of the deed. The Notaire is equally responsible for proper transfer of the title and liable for any mistakes made in the deed, for which he has professional indemnity.
The Notaire's fees are nearly always paid by the buyer, in addition to the transfer tax fees.
AUTHENTIC DEED OF SALE:
A period of approximately one to three months is generally required for the necessary research to be completed before closing the transaction, and the signing of an Authentic Deed of Sale.
The Authentic Deed of Sale: or "Acte de Vente" is kept in the Notaire's archives in perpetuity, after it has been presented to the Registrar's Office for registration purposes, and an official "copy" (expŽdition) is provided to the buyer as evidence of the title.
The Bureau de Conservation des Hypothques:The "Registrar "or the "Title Office". This is the office where ownership is recorded and also where any charges or liens against a particular property are registered. The registration of the Authentic Deed of Sale document at the Bureau de Conservation des Hypothques, signals the definitive transfer of the property.
Real Estate Transactions Taxes & Costs
The Buyer:Buyers enerally pay for the Notaire's statutory fees along with any filing and registration fees (globally referred to as "transfer taxes") to be paid in a transfer of property. The amount of the transfer taxes to be paid upon a property depends on several factors including: whether the property is developed or undeveloped; whether the property, if developed, has been completed more than five years earlier or not; and if non-developed, whether the purchaser plans to build, and if so, when, etc.
The Seller: Sellers are responsible for the payment of the capital gains taxes due, if any. The Seller, generally is responsible for sales commission payments to Real Estate Agents involved in the transaction.
Capital Gains Taxes: As of January 1st 2004, the capital gains tax for an American citizen resident holding property in his or her own name is 33.33% of the net gain. For a French resident it is 16% along with a 10% social contribution, for a total of 26%. If non-resident (physical persons) shareholders own property through a French SCI, the capital gains tax withheld is 16% in that the SCI is viewed as a pass-through, unless viewed as a corporation for tax purposes. If a French commercial corporation sells property, the corporation should declare and pay the capital gains at the time of its annual filing. The capital gains tax paid on the island of St. Barthelemy will continue to be treated as a credit towards the amounts due in the United States as a capital gains tax, thereby avoiding double taxation. The notion of avoidance of double taxation is in fact the basis of a treaty and will continue to operate under the new Overseas Collectivity of St. Barthelemy.
It is important to obtain local counsel to properly review the transaction, to provide support to your United States Tax Attorney or Accountant, as required, and to analyze the your specific situation so as to ensure that your ownership experience on the island of Saint Barthelemy will be a pleasurable one without unpleasant surprises.
When investing in real estate in St Barts, it is important to determine the most advantageous manner by which to purchase the property, as well as how to insure and maintain ownership for years to come.
- Will the property be purchased in the buyer's legal name?
- Will the property be purchased jointly?
- Will the property be purchased with a wife or husband?
- Will the property be purchased through a corporate structure? (SCI)
Societe Civil Immobiliere (SCI): An SCI is a real estate holding corporation whose corporate purpose MUST be civil. The corporation is not commercial in nature and may only hold real property. An SCI may engage in the acquisition, lease, rent, sale, improvements, and management of the property along with anything directly or indirectly related to its purpose. It must be specified that if an SCI rents property it may be deemed, for tax purposes, at the level of corporate taxation as opposed to personal taxation, depending whether the property is furnished, rented yearly or seasonally, etc.
For Internal Revenue Tax purposes, pursuant to United States Treasury regulations, an election may be made to have the SCI treated as a corporation or partnership. The time period in which to make the election is very limited, and the tax implications of doing so, or not, potentially significant. The choice for United States tax purposes, including the resulting deductibility of expenses and taxes due or paid, must be quickly established.
SCI must have a minimum of two (2) shareholders, regardless of the distribution of shares among them. The shares may be held by an individual or by a legal entity, with the exception of a trust, which is a legal structure not recognized in France.
The answers to these ownership questions will depend on a combination of buyer's personal circumstances, inheritance, tax projections, general tax considerations, the source of the funds, and French inheritance laws.
Under the general provisions of International Law, real property is disposed of at death pursuant to the laws of the country in which the same is situated. Such is the case when real property is held in an individualÕs name. When the property is held through a corporation, the corporate shares are considered Òpersonal propertyÓ and thus disposed of, pursuant to the laws of the country of residence of the decedent without regard to the laws of the country in which the property is situated.
Under French law, there is a forced heirship provision for children in France and French Law does not allow for the exclusion of children as heirs regardless of the provisions of a Last Will and Testament. The rights of the children depend largely on the number of children from the marriage. Likewise, French law does little to consider the complexities associated with todayÕs mosaic families in which children may in fact result from one, two, or more marriages or even yet, certain adoptions. French estate law favors bloodlines as opposed to family ties or the contractual ties of marriage. In order to benefit from the advantages of the tax treaties and applicable laws, depending on the individual circumstances, one may want to consider the creation of a French corporation called an SCI (Societe Civil Immobiliere), prior to the purchase of property, such that the buyer is the SCI.
In France, all choices relative to a purchase must be made before the closing, as any modifications made after the fact could be very costly. This means carefully weighing the aforementioned legal, fiscal and patrimonial factors applicable under French law. These factors are variable for each individual. There is no one solution, but rather several different choices available to meet each individual client's needs.