A growing number of U.S. citizens are interested in purchasing real estate in France, whether for personal use, rental investment, or as part of a retirement plan. While France places no nationality restrictions on property ownership, buying real estate as a non-resident involves specific legal, tax, and reporting obligations in both France and the United States.

This guide provides an overview of the key legal steps, tax considerations, and compliance requirements that U.S. citizens should understand before purchasing property in France.

U.S. citizens may acquire French real estate in their own name, jointly, or through legal entities such as a Société Civile Immobilière (SCI) or a U.S. LLC. Each ownership structure has different legal and tax implications, particularly in light of U.S. reporting obligations under FATCA and IRS regulations.

1. Legal Steps in the French Property Purchase Process

The Preliminary Contract

The first step in a French real estate transaction is the signing of a preliminary agreement, known as either a Compromis de Vente or a Promesse de Vente.
This agreement sets out the essential terms of the sale and may include suspensive conditions, such as obtaining mortgage financing.

The Mandatory Role of the Notary

In France, the involvement of a notary (notaire) is legally required for all real estate transactions. The notary is a public officer responsible for:

  • verifying the legality of the transaction,

  • drafting and authenticating the deed of sale,

  • ensuring the transfer of title,

  • collecting taxes and registration duties on behalf of the French authorities.

Timeline of the Transaction

The purchase process generally takes two to three months from the signing of the preliminary agreement to completion of the final deed of sale.

Financing Options

U.S. citizens may finance their purchase:

  • through a French mortgage loan, or

  • by paying in cash.

Financing through a U.S. lender is possible but often more complex due to cross-border regulatory and security requirements.

2. Taxation in France

Purchase Costs and Notary Fees

Acquisition costs include notary fees and transfer taxes:

  • approximately 7–8% of the purchase price for existing properties,

  • approximately 2–3% for new constructions.

Real estate agency fees are generally paid by the buyer, unless otherwise agreed.

Local Property Taxes

  • Taxe Foncière: an annual property ownership tax.

  • Taxe d’Habitation: although largely phased out for primary residences, it may still apply depending on the property’s use (e.g. secondary residence).

Rental Income Taxation

If the property is rented out, rental income is taxable in France.
U.S. citizens must also report this income on their U.S. tax return. The U.S.–France tax treaty helps prevent double taxation, but careful planning is required to fully benefit from its provisions.

Wealth Tax (Impôt sur la Fortune Immobilière – IFI)

If the net value of your French real estate assets exceeds €1.3 million, you may be subject to the French real estate wealth tax (IFI).

3. U.S. Tax Reporting and Compliance Obligations

FATCA Requirements

The Foreign Account Tax Compliance Act (FATCA) requires U.S. citizens to disclose foreign financial assets.
French financial institutions must report accounts held by U.S. persons, and U.S. buyers may be required to provide a Form W-9 to banks or notaries.

IRS Reporting Obligations

U.S. citizens may be required to file:

  • Form 8938 (FATCA), and

  • FinCEN Form 114 (FBAR) if they hold a French bank account.

Failure to comply with these obligations may result in significant penalties.

Ownership Through Legal Entities

Entities such as SCIs, LLCs, and trusts are treated as foreign entities under U.S. tax law.
Using such structures can significantly increase reporting and tax complexity due to specific IRS rules applicable to foreign corporations and trusts.

Professional advice from a tax advisor experienced in U.S.–French cross-border taxation is strongly recommended before purchasing through an entity.

4. Inheritance and Estate Planning Considerations

Forced Heirship Rules

French inheritance law includes forced heirship provisions, requiring that a portion of an estate pass to the deceased’s children.

Since 2015, U.S. citizens have been permitted to elect the application of U.S. inheritance law to their French property. This election must be carefully structured to avoid unintended tax consequences.

Estate and Inheritance Taxation

U.S. citizens should consider the interaction between:

  • French inheritance tax, and

  • U.S. estate tax, which may apply to worldwide assets.

Advance estate planning is essential to ensure compliance and tax efficiency.