Many buyers of French property intend to let them out at certain times of the year. This can be an informal arrangement – letting to friends and family perhaps – or it can be a full blown gîte business.As a first principle it is important not to blur the distinction between a gîte business and a guest house.

If you offer services such as reception, daily cleaning, bedding and linen and baby-sitting these may be classified as para-hotel services which could mean you must register for TVA (VAT). This in turn means you will then have to charge your guests the reduced rate (5.5%) for the accommodation and the full rate (20.6%) for the other services.

In practice this is applied by charging the lower rate on 75% of the receipts and the higher rate on the remaining 25%. In addition to this you will have to pay the so-called professional duty – a tax so complicated that it requires a professional to unravel it.The lesson is to try to limit what you offer to little more than the accommodation.

This does not mean you will completely escape the long arm of the taxman. Those who do not register for TVA have to pay lease duty – 2.5% of your receipts – unless the total receipts do not exceed €1,800 a year. You will also have to pay land tax. You will, however, avoid habitation tax on the part of the building that is available exclusively for renting.

The Right Place

If you intend to have a successful business certain locations are much better than others.

The most popular tourist areas are largely seasonal. This means that it is all too easy to have unrealistic expectations as to the possible returns. Only the Alps and the Cote d’Azur have anything approaching a year-round season. The season in much of northern and central France is generally no more than 12 to 14 weeks. That said, there are areas, particularly close to the Channel ports, which, with targeted promotion, can produce a year-round return.

However, the southern half of Brittany remains firmly the first choice of the UK gîte buyer largely because the area offers a unique combination of lower property values, good summer climate, the attractions of the Atlantic coast and reasonable accessibility. The Loire Atlantique and the Dordogne also remain popular with UK buyers, although property bargains are more difficult to find than they were a decade ago.

A Practical Decision

Buying a gîte should be a practical rather than an emotional decision. A property that will convert into several small units has much to recommend it. There are plenty of gîtes available for large families or families sharing accommodation. There are relatively few offering good quality accommodation for four people or less. Buying a property as a gîte should have more to do with gaps in the market than your own preferences.

Practicality also dictates that you consider the following questions before turning your French property into a gîte business:

• Have you taken into account the cost of equipping the gîte with furniture and fittings?
• Will it cost more to convert than you could sell it for after conversion?
• Have you taken the security of an empty property into consideration?
• Who will manage the property, clean and check it between lettings?
• Will having the property as a business affect the terms and conditions of your mortgage and insurance?

Gîtes And The Law

The formalities of buying a gîte are the same as those for buying any other residential property. However you should:

• Inform the notaire of your intention. He will add the appropriate clause into the acte de vente, which saves additional paperwork later on.
• Inform the Registre de Commerce and the tax authorities. If you fail to do so punitive financial penalties can be applied.