What is it ? How does that work?
Under this specific scheme and as soon as purchased, the owner of the property would be expected to enter into a French commercial lease with a company specialised in para-hotel activities, tourism management and rental of these kind of properties.
The duration of the lease is generally for a fixed term of 9 years without the possibility of bringing the lease to end before the expiry date.
In return, the owner receives some annual amounts (rent) after deduction of various costs and charges.
The commercial lease agreement would also specify the number of weeks and period during which the owner would be entitled to spend time in his/her property and use it during said weeks (low and high season generally).
In parallel, the VAT is refunded back to the owner of the property.
Some of the larger developers advance the VAT (TVA in French) to the purchaser (in this case, the purchaser would only pay 80% of the purchase price, instead of 100 % and then claim the 20% back), and they receive the money back from the French Tax authorities.
Sale of the property
This would not be the case if the property is sold with the existing lease intact.
Termination of the commercial lease
For further information on leasebacks please click here.