Pitfalls to avoid when buying a property in France @ Advocate Abroad (2024)

FAQs

What are the risks of buying property in France? ›

Tax Burden for Property Owners: France is known for its high taxation on property, including local taxes, wealth tax (for higher-valued properties), and capital gains tax on property sales, coupled with a general high cost of living.

The French property market has remained stable, thanks to the continuous demand from both domestic and international buyers. However, non-cash buyers have found it challenging to enter the market due to high interest rates and unfavourable borrowing conditions.

Americans can get a French mortgage under some circ*mstances, but it is extremely difficult. The 'Foreign Account Tax Compliance Act' (FATCA) is part of the US tax code and was introduced in 2014 to help counter tax evasion. French banks find the cost of complying with this to be prohibitive.

The low-down

What many people don't realise, however, is that it is actually the buyer who pays for the notaire, rather than the seller. So, if you are thinking about putting your Paris property on the market, you can rest safe in the knowledge that there won't be any cost on that score.

Aside from the agreed property purchase price of your French property, you will need to account for Droit de Mutation (stamp duty), which is levied at 5.8% for all properties sold that are over five years old. New property developments attract a stamp duty charge of 0.7% plus VAT.

Its stable economy and legal system, added to its history and culture, makes France attractive to property investors. Currently, France can point to low interest rates and a rental sector that show's continual growth, especially in the main cities such as Paris, Lyon and Bordeaux.

Once you have bought your dream home in France If you would like to relocate to France or visit for longer than 90 days you will require a visa, which is easy to obtain once you are the owner of a French property. You may wish to apply for a Long stay visa valid for residence (VLS-TS).

With a delay, the turnaround can be explained by a lower annual volume of transactions: it collapsed by 26% between 2021 and 2023 in France, according to data from the notaries. Paris and the Ile-de-France region are no exception.

A French bank account is essential if you plan to buy a property or take out a mortgage in France. It's also useful for everyday living in France if you want to make your purchases in euros, even if you are just on holiday.

French Retirement Visa

France doesn't offer a retirement visa. Most Americans hoping to retire in France apply for a VLS-TS Long-Stay Visa. This visa will allow you to live in France for up to a year without having to apply for a residence permit. You can then apply for a residence permit to remain in France longer.

Is it hard for a US citizen to move to France? ›

Yes, US citizens can move to France permanently, but there are several legal requirements involved. First, you must apply for your long-stay visa and be sure to renew it every year. Once you have been in France for 5 years, you can apply for permanent residency, or apply for French citizenship through naturalization.

U.S. citizens/residents may purchase French real property in their individual names. If they do so, the French real property, as immovable property and under international private law rules, will be governed by French inheritance and tax laws. This includes forced heirship rules.

All properties located in France are subject to a 3% real estate tax. The tax is assessed annually on the fair market value of the real estate, in proportion to the direct or indirect interest held. All entities in the chain of ownership are jointly liable for the payment of the tax.

Many people ask why notary fees are so high in France. To be fair to the notaries, the majority of this sum is designated for government taxes and fees, and obtaining the necessary paperwork to be sure that the property you are buying is legally sound.

Capital Gains Tax in France

The basic rate of capital gains tax is 19%. Tapered relief against the tax is granted over 22 years of ownership, commencing from the 6th year of ownership, as follows: No allowance for the first 5 years of ownership. Between 6 and 21 years of ownership: 6% allowance per year.

Many of France's historical challenges for foreign investors, such as overall labor costs and labor protections, social legislation, the social climate (strikes and protests), high tax burden, and the complexity of administrative procedures persist, but France's capacity for innovation and research, recent pro-business ...

Once you have bought your dream home in France If you would like to relocate to France or visit for longer than 90 days you will require a visa, which is easy to obtain once you are the owner of a French property. You may wish to apply for a Long stay visa valid for residence (VLS-TS).

U.S. citizens/residents may purchase French real property in their individual names. If they do so, the French real property, as immovable property and under international private law rules, will be governed by French inheritance and tax laws.