Investing in real estate in France is more profitable than abroad: Interpretation

In these periods of inflation, many French people living in France or abroad are wondering about accommodation and investments. Invest in France or abroad? What is the most interesting? What are the advantages and disadvantages of a rental investment in France or abroad?

Does investing abroad have a real advantage over France?

Some countries attract the French, in particular, because of the tax system, which seems more interesting, but some variables are often left out, even if they really affect the investment.

Investments in rental housing

Investing in Europe (Germany, Spain and Portugal), what are the advantages and disadvantages?

The first variable to consider when investing abroad includes all terms and conditions.

WITH borrowing rate usually between 1.3% and 2.5%, France has a lower rate than Spain and Portugal. They charge both fixed and variable rates. Spain usually offers a fixed rate of 1.75% to 2.75%, with an increase of 0.2% to 0.4% for foreigners.

Using fixed rates in Portugal can be quite difficult as it is not a common practice. Indeed, banks prefer a variable borrowing rate based on Euribor (one of the main reference rates of the money market in the euro area). As for Germany, while it also offers variable rates linked to Euribor, investors will also have access to fixed rates between 2.8% and 5%. The loan term is usually longer for residents of Spain and Portugal (40 years and 30 years, respectively). As a French expat abroad, the requested contribution, however, does not vary much between countries, as it is between 30% and 40% of the loan amount.

Separately from taxation related to taxable income based on the chosen taxation system, France does not have any significant rules. Income tax (rent or property) in other European countries is charged at a flat rate of 19% (Spain) or 25% (non-residents of Portugal), or at a progressive rate of up to 45% (Germany). In addition, a property transfer tax has been introduced.

many additional costs should be taken into account, as certain procedures require registration fees, translation of documents or the systematic use of a lawyer for Spain.

Investments in rental housing

United States, Indonesia and Mexico, what are the disadvantages?

The credit issues it is very difficult in these countries. Borrowing is almost non-existent in Bali, and rates in the United States and Mexico exceed 5%. The contribution required as a non-resident is usually over 35% and can be as high as 50% in Mexico.

The administrative procedures to receive property such that it is necessary to accompany. There are many costs and obligations to consider in the United States, such as the cost of verification and registration or even obtaining an ITIN.

In order to legally purchase real estate in Indonesia, the buyer will need to enter into a so-called “lease” agreement with an Indonesian or, usually, establish a capital company. Indeed, Indonesians are the only ones who have the right to property. In case of creation of a so-called PMA company, the buyer will have to pay the costs associated with its creation.

The Mexican state, on the other hand, requires a trust permit (fideicomiso). This permit, which is valid for 50 years and is transferable, corresponds to a “contract” with a Mexican bank, which will transfer the right to manage the property, but will remain the real owner of the property.

L’investment in rental real estate is a lever for creating attractive annual income. When we take into account financing possibilities, taxation or costs related to administrative procedures, the balance becomes more difficult. Therefore, it is important to learn about the intricacies of each country and make a real comparison.

Investissement-Locatif.com offers turnkey services perfectly tailored for foreigners investing in real estate in France. Investing is done remotely, without the need to spend time there. Experts take care of your assets. Feel free to make an appointment with an investment advisor to launch your project.