Where can I learn how to purchase property in France? (for a US citizen)
 

I visited Nice & Monaco last weekend, and I'm totally in love with the place! Looking into purchasing a vacation rental property there, with the intention of visiting a few times a year and renting to rest of the year to others.

Would love to hear back:
1. your thoughts on the idea
2. suggestions on where I can find good info on the legal steps of purchasing property (I'm a US citizen) and other considerations I should know about this idea

(I've found DOZENS of sites purporting to tell me how it works, but 100% of them are merely trying to sell me their services or are just ad-link bait with a basic article about the subject.)

Thanks in advance for any advice!


Dave from Seattle

The best way is probably to go there, and look for a real estate agent who has a large foreign clientele.

My example is the reverse: we wanted to sell our house, asked two agents about listing it. The first one was French, although she did have a Dutch person working for her, who low-balled the value of the house, probably because it was not a traditional one. The second one was Dutch who walked in and said "I can sell this house." He was optimistic about the price, but we did sell it through him to a Belgian architect – the real estate agent had found the one person who was not set on buying a traditional house.

However, assuming you find the real estate agent who can work out the details for a foreign purchase and advise you on what you need to do in France, he or she will probably not be able to help you when it comes to U.S. tax liabilities. This is an important issue, especially if you intend to derive income from the house, i.e. rent it.

To transfer money to Europe, which you will need to do, look into xe.com and transferwise. The latter is the cheapest way of transferring money, but at the moment it does not allow you to deposit a specific amount, you can only specify the amount to be taken from one account – in this case your U.S. account. That does not work if a specific deposit would be required. But this can be worked around by paying the specified amount using your French bank account (declared to the IRS); your deposit into your French bank account simply needs to be more than that amount.

Hi DaTravellingBear,
Though it seems very tempting, it is not easy to buy and maintain property in France. There is considerable red tape. If you rent it out, you'll pay taxes over any rental income in France, and will have to file a tax return there. There are annual property taxes to pay, the taxe d'habitation and taxe fonciere. These depend on the area where your property is located. Some areas charge an increased tax if it's a second home. Then there's the electricity, water, tv and internet connections and bills. And dealing with any repairs or renovations.
In my experience with this, French contractors do not show up when they say they will, getting things done (such as waiting for the engineer to connect your TV and internet) will take up your entire holiday.
If you decide to sell it, you'll pay capital gains tax.

Just rent a place whenever you want to go. Much cheaper, and MUCH less stress.

Awesome info! Thanks very much, Michael for those recommendations. Further research of mine was going to focus on how to transfer funds US>France the most economical way, so you just saved me a lot of time searching.

I 100% agree with you I need to use a good local agent. However, I still want to be fully educated before I move forward so I'm still interested in hearing from you (or others reading) about a site that actually does a thorough job of explaining the legal steps (and caveats, too.)

Thanks again!

Tulips: "Just rent a place whenever you want to go. Much cheaper, and MUCH less stress."

Yes, you are completely right and I do know it. :-) Can't help it though... I've always purchased property in the US that I enjoyed and (other than the 2008 crash) have always done okay with it.

If the property was strictly for my own enjoyment I think you would have just strayed me to your opinion :-) But there's another consideration I didn't provide: I'm thinking of purchasing something like a duplex, so I can have a place for my mother-in-law (residing in Germany) to retire. The idea would be she could look after it -- scheduling the repairmen and waiting for them to arrive, for example -- in return for me covering the costs. She fluently speaks/reads/writes 6 languages including French and is incredibly well-traveled and interesting to speak with. She's done a lot of cultural anthropology field research. I think the vacation renters would be fascinated and entertained by her stories, and she would most likely become an expert on Nice pretty quickly too.

So, I have a built-in property monitor, and part-time vacation host, and she gets her place in the sun. Does that sway your opinion? :-)

You should know that in France in cities with a population greater than 200,000, such as Nice, it is illegal to rent your property for less than 1 year, or up to 9 months for students, unless it is the owners primary residence in which case it can be rented for up to 4 months a year. There are complicated ways around these laws but it makes it virtually economically unfeasible. Many people still rent short term but they are doing so illegally.

<i>Just rent a place whenever you want to go. Much cheaper, and MUCH less stress.</i>

I fully agree, although the issue of taxes on the French side sounds more complicated than it is. They can be paid automatically, and this is also true of utility bills.

I had nothing to do with the legal steps. That was taken care of by the real estate agent and the <i>notaire</i> who holds the escrow.

Well, that would work. Just don't underestimate the aggravation of dealing with French bureaucrats, the paperwork and red tape. Good luck!

FrenchMystiqueTours: "You should know that in France in cities with a population greater than 200,000, such as Nice, it is illegal to rent your property for less than 1 year"

WOW - super-helpful info my friend! Thanks for alerting me.

I guess in this case I need to provide even more details... the specific town I fell in love with was Villefranche-sur-Mer (Google map: https://goo.gl/maps/pNTHn) which I'm pretty sure is a separate municipality from Nice. It probably has it's own rules as well.

The law you just told me about are some of the things I really need to learn about, so thank you very much for that insight!

Not to mention the problems (since 2013/2014) of the US making it almost impossible for an American to have a European bank account (which would be necessary to collect and remit rental money). European banks are finding it a LOT easier to just refuse to provide bank accounts to Americans.

You should also know that capital gains taxes are huge in France if you have not owned a secondary residence for decades.

Thanks guys - appreciate those additional caveats. This is sounding a little more bleak. :-) Maybe this thread will be the best site for learning how to purchase property in France. (or more likely, "why not to...") :-)

I can overcome the account hurdle, and I'm not as much worried about the capital gains because I think any gain will have been already spent on taxes and upkeep of the property.

I'm still in the market!!!!! but keep the caveats coming. :-)

BTW, it is the buyer who pays the agent's and legal fees. We agreed on a price which is what was deposited into my French bank account.

How do you plan to pay for this property? To purchase property in France, you must first establish a French bank account - many banks now want nothing to do with foreigners, due to the FATCA and other new regulations. If you intend to take out a loan with a French bank, you are obligated to undergo a physical exam, in addition to other requirements.
The seller is not really required to disclose problems with the property, other than providing the mandatory assessments of the electrical, plumbing and energy systems. There is a requirement to check for lead in the water pipes and in paint, asbestos and termites, but it's up to the buyer to examine everything with his/her own expert, if

if you want to get the whole story.
At some point, you will probably want to sell the property, which will probably take much longer than you hope for. The seller pays an awful lot of taxes, notaire's fees, fees to the agency assisting with the sale, capital gains tax - if you think you'll make a profit, you're mistaken. You'll be lucky to come close to breaking even.
As was mentioned, short-term rentals are problematic, and long-term rentals can be worse, since it's difficult to evict tenants, even those who haven't paid rent.
If you're still serious - and have money to burn - it would be a very good idea to rent a place for a minimum of 3 months (6 would be better), and come in the winter, so you'll know what life is like here most of the time.
And stop watching HouseHunter'sInternational, which is nothing but a fantasy.

<i>The seller is not really required to disclose problems with the property, other than providing the mandatory assessments of the electrical, plumbing and energy systems. </i>

There is also an asbestos inspection.

<i> notaire's fees, fees to the agency assisting with the sale,</i>

I didn't; sold the house last year.

We flirted with the same idea for a couple of years. There is a magazine, France, (francemag.com), that has a lot of articles on purchasing in France. My assessment was that the magazine was gear towards Brits wanting to buy property in France. We subscribed for a couple years and read a number of interesting articles related to purchasing. Part of the problem is that the French laws are derived from the Napoleonic code which can be very different from the English common law. French law concerning property, transfers, inheritance, etc., is very different.

Finally decided that renting was the way to go.

Only the small banks are scared by the FATCA rules. The big banks (BNP Paribas, LCL, Société Générale, etc.) will allow you to open an account as long as you follow all of the FATCA regulations. However, you will be under suspicion at all times, but you can thank FATCA for that.