Cancellation leaseback contact after 3yr

Hi

I guess that the best solution in the current situation would be to change to classic.

There are many lawyers in France dealing with those problems : Residence de Tourisme properties.

Many mgmt companies are in trouble... not due to the crisis.

Most of the mgmt companies break the lease after 3 years or sell it to another company ...

Have a look at

http://www.frenchleaseback.net/forum/forum_posts.asp?TID=359 &PN=1 --- Burning question on VAT situation

See also this FT article. mccos39940.4806597222

I wonder if any posters on this thread know what happens in the

following circumstances. Management Company is put into liquidation

and the leases are cancelled. Most owners sign new leaseback contracts

with a new management company within 2 months of the leases being

cancelled. Other owners have had enough of the leaseback system and

do not sign with the new management company, and instead establish

their own "mandats de locations" with local letting agents. Or simply put

their apartments up for sale, glad to have the opportunity to buy out of

the whole nightmare.

Do these other owners have to repay TVA and if so, when does the

obligation arise; after 1 month or after 12 months from the cancellation of

the original leases?

I understand that if your leaseback company is in Receivership, the Receiver is entitled to break the lease agreement at any time!

I have read that if the Receiver decides to cancel
all leases in a given development, leaseback owners will become liable to
repay the VAT even though they took no part in the cancellation of the lease agreement. Unless of course another leaseback company takes over within 12 months from the date leases are cancelled.

Seamus you are correct: the owner has 12 months to repay the VAT - the 12 months period run from the day your lease was cancelled.

exple if my lease is cancelled on May 2009, I have to repay the VAT in May 2010.

For non French resident this can be done via the accountant cabinet (Gefi for exple). You might also receive a letter from the French tax office where your residence is located.

If you contract out of the ZRR/Demessine/RT and opt for a normal property you have to declare it (by registered post) to the French local tax office .

So if you do not contract out of ZRR/Desessine/RT and opt for a normal property then you do not have to declare it and thus remain in leaseback.

Lets not forget what leaseback is - the provision of furnished property for short term rentals to increase tourism and trade.

Correct me if I am wrong here but the TVA is realised by the provision of services being that you need to provide 3 out of 4 of a list of which Linnen, Reception, Cleaning and Breakfast are 4. This then allows you to charge the TVA on top of your rentals and thus remain compliant to the leaseback model.

So what you need to do is find a company that can provide you with the given services and enter into a "lease agreement" with that company for a specified period of time.

What the French government quite rightly do not want you doing is using the place as a holiday home.

You have 12 months to find a management company and provide the mentioned services.

So guys how hard is it to establish or find a management company to provide the mentioned services? Not very. How many of you in the UK own short let properties and provide your tennants with a lease?

I know a few people who have ousted out of leaseback and now rent privately as a furnished rental with the governments agreement in writing.

My very informed opinion of this is as long as you provide services within the guidelines the TVA is not a problem provided you have a lease.

The Dog

I suppose there will have to be a test case on this before we find out the truth and I guess that will be me this year.

I have a specifically drawn up lease sitting with a French Notaire - Tax office at this moment in time, no different to any other you or me have signed.

What people need to remember is that the property should not have been bought based on the TVA refund alone as this was always going to be a lever.

If you can or have somebody who is prepared to pay the TVA should the need arise then you are on a no loser (thats my position). This will then let you progress into exploring the even darker sides of this scheme.

Some people are prepared to instigate the name of leaseback and expose the truths or even fund those doing it. This will make a great TV documentary when it all gets sorted and leave a few people in legal hot water for bringing others into disrepute in their business dealings.

Happy 2010 by the way.

Mutley

Paul

hi Mutley,

It is a bit more complicated than that!... if you have bought under ZRR/Desessine/RT programs and you now want to provide the 3 services you mentioned out of the 4, 1/ the furniture must not be yours 2/ also need to declare it to your local tax office 3/ the local agent will also have to complete a declaration at the city hall...

rent privately as a furnished rental = LMNP.

Usually it is possible to be under LMNP if you have bought your furnitures at the beginning of the lease (check on your bills and invoices)

Will it be possible to send me a copy of the govnt agerement: " know a few people who have ousted out of leaseback and now rent privately as a furnished rental with the governments agreement in writing"

Happy New year to all of you.

Stephanie, we live in a world of global communication and european unity but this seems to be a process that time has fogotten? Well that is what everybody is being lead to believe!

Luckily for me I paid for my furniture when I purchased my property!

However what the deeds on my property say and what the banks have my loan secured against is another issue for another day .

As far as the letters are concerned they belong to others but I have had sight of these and been advised how to provide the services required to retain my TVA status. It is very very easy indeed.

The main problem that most people will have when they look deeper into this is that they purchased under one agreement but the property was delivered or being run as another and never qualified for the other !

For me the TVA is not an issue as I have a good advisor and if push comes to shove, the resource to tap into cash and pay it back to live another day and fight this battle to what is going to be a very bitter end for some.

Just a quick tip for the rest of you, your accountant was appointed by your selling agent probably. That was done for very good reason and you perhaps need to think about moving away from them.

I know more than I let onto Stephanie. I am now fresher and more informed than ever and this WILL NOT go away from this leaseback scam until I have finished with it.

Mutley

If one cannot repay the VAT, the local tax office will first pledge the property, before carrying out a seizure/repossession of the same and sell it at auction.

There could well be a shortfall or negative equity, in which case a claim could in principle be pursued against the owner's other assets e.g. in Ireland or the UK. I understand that the risk of such a nightmare scenario materialising are remote, but they cannot be totally avoided of course.

See this other posting on the consequences of a 'head in the sand' approach: http://www.frenchleaseback.net/forum/forum_posts.asp?TID=366 &PN=1

Fabien
French Solicitor http://www.solicitor.fr

the local tax office will ask to pay back the VAT but it can be done over several years. Talk to them.

Mutley, you mentioned in one of your posts that you have a 'specifically drawn up lease'. Is this something you can share?

I'm in a similar situation - bought a furnished leaseback; ex-RH/Q; cancelled lease; going it alone attempting to retain the TVA refund. We were LNMP when we signed up with ResidHotel and are trying to retain that status.

We've got our keys and signed a 'Mandat de Gestion' with a local agent for the winter season to try and get some rental income while we work all this out. They can provide 3 of the 4 services and will invoice us showing we charge TVA. Before I sign for the summer I'd like to get a proper lease/contract in place. If you have an example that would be amazingly helpful!

With any luck, that should cover everything??

Hi

Is the VAT charged at 19.6% or 5.5%?

Regards,

VAT on rents is charged at the rate of 5.5%, whereas the VAT rebate on the purchase price is 19.6%.

Regards,

Fabien

Dear Fabien,

I do agree. However on a Mandat de gestion it seems that the VAT is 19.6%... so people need to check before signing any "mandat de gestion".

Ian

I know to much about this now to put anything anywhere. Needless to say I will be going to court to defend my TVA standpoint and very arrogantly I will say that I will win.

My lease and my company that will soon be set up to operate in France will for me be a last resort.

Paul

Mutley, I'm guessing your response means you can't share any content from your lease. I don't quite understand your comments about 'I know too much about this now to put anything anywhere', but that's probably just me.

I thought your lease was something like the lease I hear Bertrand can draw up. It apparently contains everything needed to help retain LNMP status. I contacted him about this. I'll post my experience once I get a lease drawn up and signed by our local management company.

Bertrand, if you're out there, can you reply to my numerous emails? Thanks :-)