US citizens: What to know before buying property in France

Few countries can compete with the diversity of stunning properties found in France. From chic Parisian apartments to ski chalets with dramatic Alpine backdrops, and from villas with views of the Côte d'Azur to historic houses set in magnificent countryside – you’ll find all this (and more) in La Belle France! 

US citizens: What to know before buying property in France
An interior from a château near Bordeaux currently for sale with Leggett International Real Estate

It’s no wonder the French property market attracts great attention from US citizens – especially with the current strength of the dollar against the euro. But when buying abroad, there’s lots to consider. 

Here are six things to ask yourself as you search for your dream French home.

1. Where will you buy and why?

If you’ve been recruited by a company in France or you’re retiring to an area you’ve fallen in love with, you’ll already have a clear idea of where you’ll live. Anyone looking to work independently, buy a second home, or discover their dream retirement location, however, is spoilt for choice and needs some clear purchasing criteria.

Are you craving fresh air and picturesque views or is your ardent desire to experience French culture and fashion every day? Do you want the adventure of renovating an older property or something with all mod cons or even an off-plan option?

Even if the best access to the best ski slopes is all you care about, you still have many locations in the French Alps to consider! Looking for luxury with a château, a vineyard or an exclusive Paris apartment? Feast your eyes on Leggett Prestige, which showcases more than 500 distinguished properties for sale across France, all hand-picked by experts at leading French real estate agency Leggett International Real Estate. 

If you’re looking for a new career, you may also want to know that Leggett International Real Estate is currently recruiting independent sales agents across France.

Thinking of buying your very own French home? Find the right property for your needs and budget with Leggett International Real Estate

An exceptional modern villa for sale in Tourrettes, near Nice. Photo: Leggett International Real Estate

2. What type of visa do you need?

France offers a wide range of visas for non-EU citizens. You may feel confused by the options, so let’s take a closer look at them. For anyone being taken on as an employee, your employer will sponsor your work visa (although you may still have to do the paperwork yourself). If you’re self-employed or starting your own company in France, you can also apply for a work visa with a detailed business plan and proof you can support yourself at first.

What if you’re buying a second-home and want to stay for more than the 90 days out of every 180 allowed with a Schengen short-stay visa? If you’re ready to make France your main residence, you can apply for a long-stay visa equivalent to a residence permit (VLS-TS) lasting up to 12 months – and spend as many days as you like at your French property.

Not ready to take that step? You’ll want a six-month visitor visa (VLS-T), giving you fewer rights but also fewer responsibilities. You can also apply for a spousal visa if you marry a French citizen.

If you want to hear from experts in France on this topic and much more, take a look at this recent webinar for American buyers staged by Leggett International Real Estate.

3. Will you be entitled to French healthcare?

To get most types of French visa, you’ll first need to prove you can cover the cost of your own healthcare. You’ll probably need private insurance to cover medical costs (including repatriation) up to a minimum amount, typically around €30,000.

But if you’re moving to France, you’ll be entitled to register for the French public healthcare system after living in the country for just three months.

Once the registration is complete, you’ll get a carte vitale (health insurance card) and the French state will reimburse most of your expenses for prescriptions, treatments and medical appointments. You may then choose to cancel the private insurance you needed to get a visa.

However, most people in France buy top-up health insurance, known as a mutuelle, which generally ensures 100 percent reimbursement of your costs.

Start searching for your French home with Leggett International Real Estate, a family business with over 8,000 properties on the market across France 

4. What will your tax obligations be?

There are two property taxes: the taxe foncière (paid by the owner) and the taxe d’habitation (traditionally paid by the occupier). If you own and live in a French property, you would usually pay both.

However, the taxe d’habitation is now being scrapped for people who are neither high-earners nor second-home owners. Some municipalities are authorised to levy a surcharge for second-home owners. But most chose not to in 2022, so it may be worth investigating this further before settling on your favoured areas.

In terms of tax declarations, you’ll have to complete the new Déclaration d’occupation indicating whether the property is your main residence or second home (this is extra paperwork but not a tax bill!)

If you plan to rent out your home, the rental income you receive is taxable and you’ll need to learn how to correctly declare it. Last but not least, even if you are resident in France and pay French income tax, as a US citizen you must continue filing annual American tax returns. To learn more about taxes, healthcare and other topics, watch Leggett International Real Estate’s new video guide for Americans looking to buy in France.

This Paris apartment, currently for sale, overlooks a stunning garden courtyard featured in the Netflix series Emily in Paris. Photo: Leggett International Real Estate

5. What will it mean for your pension plans?

Whatever your age, it makes sense to research the implications of moving abroad for your retirement plans. If you’re going to be an employee in France, you’ll be obliged to join a state pension scheme and your employer may well offer you a private pension. But as an American, you may want to consult a cross-border financial expert to properly understand the implications of the latter. 

Some French pension products, such as a PEA (Plan Épargne Action), allow you to take cash out within five years of opening. But the Internal Revenue Service (IRS) doesn’t consider this a true pension. Americans living in France who open a PEA therefore face being taxed yearly, warn experts.

US citizens can bring any US-based pension to France but you need to tell US tax authorities that you’ll be paying French income tax on it. If you’re retiring in France, you’ll need to report your US pension on your French tax return. But don’t worry, that doesn’t mean being taxed twice; after reporting your US pension, France will give you a credit equal to the French tax.

6. Do you need a property management service?

If you’re buying a second home, you face additional questions. Will you rent it out when you’re not there to make an income from your investment? If so, will you only accept short-term stays or could paying guests enjoy your prize property for lengthy periods? And if you prefer to leave it unoccupied when you’re in the US (or elsewhere), how will you ensure it’s looked after?

Whatever your answers, you’d be wise to consider a property management service. With Leggett Property Management, you can choose from a range of plans. Whether you just want regular check-ups and someone to cut the grass or you’re looking for full rental management and a bespoke concierge service, you can find a solution to make your life easier. 

Ready to start your search for your dream French property? Take a look at the homes currently for sale with Leggett International Real Estate 

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What should I do if I want to dissolve my French property SCI?

Owning a French property through an SCI brings with it some extra complications, including with the new property tax declaration. We asked the experts whether dissolving the SCI is a good idea, and how you go about doing that.

What should I do if I want to dissolve my French property SCI?

An SCI – société civile immobilière – is a non-trading real estate company made up of at least two people. Essentially, it allows people to own property such as a second home through shares of a company, rather than under their own name.  

There are more than one million properties in France that are registered as SCIs, but most of them were created some years ago. In previous decades, they were quite popular, but SCIs have become less common as time has gone on and several tax loopholes have been closed.

For foreigners who own second-homes in France, the 2015 EU ruling on inheritance means that for many people their rationale for having an SCI – bypassing French inheritance laws – no longer applies.

Additionally SCIs, particularly for foreigners, represent a large administrative burden, and as such can also become a drain on finances when it is necessary to seek legal and financial counsel. 

Some SCI owners have also run into problems with the new French property tax declaration

READ MORE: EXPLAINED: The new French property declaration form for SCI owners

“An SCI is a large commitment. It means you will agree to run a company, and that involves paperwork and meetings”, explained Paris-based notaire, Laure Gaschignard.

Gaschignard told The Local that there are two primary situations where people might want to set up an SCI. The first would be for couples who are not married or pacsé (civil partnership), but want to buy property together and set up an inheritance system where the one is able to maintain either a portion of or the entire property in the event of the other’s death.

The other situation Gaschignard noted was for those who have unique family situations and are in need of a more flexible way to structure their property ownership and inheritance. 

For others, there might be some tax-based interests in setting up an SCI depending on their financial portfolio, but many have found that owning property in this manner may not have been as financially lucrative or simple administratively as previously intended.

As a result, some are wondering whether the best solution would be to simply dissolve their SCI and reclaim the property under their own name.

How can you go about switching it back?

While it is possible to dissolve an SCI and get the property back under your own name, it might be more costly to dissolve the SCI rather than to maintain it. 

READ MORE: EXPLAINED: The advantages and pitfalls of buying French property with an SCI

First, there are some scenarios where an SCI should be dissolved – if it has has reached its expiration date (typically, this is set to 99 years) or if there terms were put into contracts that set up a specific lifespan for the SCI, if there is an intent to sell the property, or if partners to the SCI opt to sell their shares to a single partner. An SCI can also be dissolved by court decision, if necessary.

Otherwise, if the partners wish to dissolve the SCI, then they must hold a special meeting to vote on the plan and to appoint a ‘liquidator’. 

Several administrative steps will follow, including publishing a posting in a legal newspaper and filing for dissolution.

It is strongly recommended that people seek professional advice on this.

Is it advisable to do so?

You should be aware that if the SCI has appreciated in value significantly, then you will likely be taxed on liquidation. While it would be possible to recover your assets, depending on the situation, you could lose out on funds in the process. 

You may owe capital gains taxes, depending on which regime you were taxed and whether the SCI is your primary residence.

According to Maître Edouard Pruvost, the best option for those looking to dissolve would be to meet with legal counsel and find out approximately how much you stand to gain or lose in the dissolution process. 

This article is a general overview on the issue of SCIs and does not constitute legal advice. Anyone with an SCI is strongly advised to seek professional advice from a lawyer with expertise in the French legal and tax systems.