Brochures of plush Parisian pied-α-terres close to Le Park Montsouris and the Eiffel Tower and one and two-bed apartments in the Cote D'Azur cities of Nice and Cannes smothered the display tables in the French Property exhibition room at the Red Cow Hotel last weekend. Many of the apartments for sale are eligible under the French Government's leaseback plan.

Eric Groux claims he is the only French auctioneer exporting the leaseback plan, which was set up in the 1980s to improve the supply of tourist accommodation in designated areas.

A tax incentive scheme, it is designed to encourage investors to buy a leaseback property - generally apartments - and let it to tourists over a nine-year period. But is it a worthwhile venture for the Irish investor? Some are sceptical but Groux, who belongs to Conseil Patrimoine, an estate agency based in Nice and Paris, was here to convince that it is.

He has already exhibited in Cork and Limerick this year and while he is vague about the numbers of Irish people who have taken the plunge, he says that he wouldn't keep coming back if it wasn't working.

"We are not unrealistic; we don't expecting a huge influx. When we visited Limerick last time bout 70 to 80 couples came in and collected our leaflets."

The Irish tend to go for Normandy or Brittany, partly because of ease of access, the English prefer the middle of France in regions like Aquitaine and Auvergne where houses can be had for the price of a garage in London. But these areas are a no-no in terms of capital appreciation and rental return, says Groux.

"It is relatively easy to borrow money from a French bank if the property is in a good location and will have a good rental return. It would be more difficult if it is in the middle of nowhere. At the end of the day we say Paris or the Riviera, we don't say Bordeaux or Languedoc because there won't be the same capital gain."

While the scheme was set up to tempt French investors, he says there are no restrictions on non-residents. He advises that a French mortgage is the best option.

French banks generally lend up to a maximum of 70-80 per cent of the purchase price over a 20 to 25-year period at low interest rates. Loans are usually given providing annual repayments do not exceed 30 per cent of income. Under the scheme, the buyer pays the asking price for an apartment less VAT at 19.6 per cent.

In return for a lease-back contract to a management company, the buyer gets a net guaranteed rental return of 5 to 6 per cent, depending on the location.

Groux estimates the management company's cut is about 15-20 per cent and for this they will look after everything from the electricity bill, service charge, advertising and maintenance of property down to changing the furniture and the bedsheets.

When investors resident in Ireland buy a property abroad, they are still subject to Irish tax laws. According to Groux, Irish residents can bypass the need to pay tax on rental income under the leaseback scheme by setting themselves up as a limited company in France.

Leaseback apartments have a commercial lease and so are deemed commercial properties with a commercial income, says Groux. "You can set up a limited French company and pay an accountant to make your annual returns. If the returns show that you don't make a profit and the shareholders are not making any money then no tax is due. You can legally depreciate the building over a period of 20 years and furniture over a 10-year period."

David Marrani, MD of Dublin-based Riviera Dreams, believes it is not quite so straightforward. "You can offset the tax against the mortgage interest if you are a French resident but under the double taxation agreement between Ireland and France, Irish residents must pay tax on rental income."

He says leaseback properties are usually sold at a premium. "Often they are so overpriced that you could find yourself in negative equity when the time period is over."

The French property market has not experienced any of the boomtime hype and inflation that has characterised the Irish market in recent years. There has been a 5 to 7 per cent rise in capital values over the last two years. According to Eric Groux, the reason leasebacks are more expensive is that there are so few designated developments and they are fully furnished and decorated. "In France, most new apartments don't even have a fitted kitchen, but with a leaseback you get everything down to the vacuum cleaner."

However, David Marrani believes this does not compensate for the inflated lease back prices. He points to the example of a leaseback studio apartment in Nice, for sale for 600,000 francs (about £80,000 or €101,579). He says it is possible to buy a good studio for under £50,000 (€63,487).

Irish buyers have been thin on the ground of late, says Marrani. "I get most of my business through my website from people in the US, UK and the Italian market. There's no point in trying to kid people that they are going to make big commercial gains. You need to be able to afford to buy in France. It's much more expensive than Spain, with bigger entry costs. Buying in France is not really a commercial investment; the people who buy there usually want a place in the sun or somewhere to retire."

emorgan@irish-times.ie