A Springtime Duty-Free Shopping Spree

What about Trump tariffs?

Avenue Trudaine - Paris 9ème

Displeased about having to now pay a 20% “Trump tariff” on your favorite French wine purchased in the USA?

Consider moving to France where you will also pay 20% in the form of VAT. The same goes for pretty much all French products. Of course, those products will remain cheaper in France than abroad since you will have no shipping cost or local state sales tax. 

The good news is that you can still purchase “duty-free” any property in France. That’s right: there’s no extra “Trump tariff” on real estate purchased in France: you’ll only have to pay the long-standing 7,5% “frais de notaire.” 

Why would I make such a deliberately ridiculous remark? It has the merit of putting tariffs into perspective. The taxes levied on real estate purchases are well-anchored in French history, but have increased from 1.5% in 1800 to 7.5%, the latest tax hike dated 2014. 

Here is how this “tax” is broken down, based on the example of a 1M€ purchase in Paris that includes the seller agent fees. Note that the tax is only paid by the buyer.

Notaire remuneration 10 065 €

Administrative formalities 1 000 €

Miscellaneous fees 400 €

Stamp tax 63 185 €

Real estate security contribution 1 000 €

TOTAL 75.650 €

The tax may seem prohibitive, yet the French real estate market sustains itself thanks to the intrinsic value of living in France.  Such taxes, combined with capital gains tax, may explain the more moderate price variations compared to those experienced in the USA. 

Conversely, property taxes in Paris are up to 10 times LESS than in major American cities. So if you hold your Paris property over a period of about 10 years, the purchase tax will be compensated by savings in property tax. In its quest to address the on-going housing crisis, the French government has recently imposed “tariffs” on secondary or unoccupied properties, so if your property is NOT a primary residence, your overall property-related taxes may be triple. 

Perhaps the most significant Trump effect for US buyers in France is the appreciation of the Euro against the USD, which is highly unlikely to reverse itself in the year ahead. For that matter, for those of you already moving forward on a property search (with or without ExquisiteFrance on your side) it may be worth your while to hedge your currency bets and transfer at least part of the required capital into Euros as soon as possible. For stellar currency brokerage, contact me for a recommendation.

Governments may set taxes unilaterally, but buyers and sellers agree on a price. 

What level of taxes and tariffs should be levied, and upon whom, is an endless debate. We cannot negotiate them personally, but price negotiation remains very much part of the real estate game in Paris. In 2025, buyers will be making brave bids. My job as a dedicated buyer agent is to make the winning bid for you.

Toward a price stabilization in 2025?

In 2023, I asked ChatGPT about the most likely evolution of Paris real estate prices. The popular AI told me I should consult local experts (including real estate agents) on such matters. So I consulted myself, and I conjured up a 9% cumulative drop by the end of 2024. The drop was closer to 8% as it turns out (and that depends on exactly what one chooses to measure).

Here we are asking the same question again: what about 2025? 

Most signs seem now to concur on a price stabilization, although that does feel counterintuitive in a world of sharply increasing instability. The Notaires du Grand Paris have just projected a 2,1% price increase for March to June 2025 compared to the same period last year. Their projection is based on signed contracts. 

The unprecedented events unfolding in the world make any prediction hazardous, but they also signal pockets of unexpected opportunities for those with the guts to act. 

With fortunes vacillating, there will be Sellers who need to sell and will negotiate accordingly. A dedicated buyer’s agent will increase your chances of a successful negotiation.

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