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.
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 individual's 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 today's 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.