French Property Taxes Explained for American Buyers

Buying a property in France comes with some taxes and ongoing costs that may be unfamiliar to American buyers. Understanding the basics before you purchase can help you budget realistically and avoid surprises further down the line.

One of the main annual property taxes is taxe foncière. This is paid by the owner of a property in France, whether they live in France or abroad. It applies to both developed and undeveloped property, so owning a house with additional land can affect the amount you pay.

The amount varies from one property and location to another. It is calculated using the property's cadastral rental value and local tax rates, which are set by the relevant local authorities. The amount can therefore differ significantly between neighbouring areas.

If your French property is a second home rather than your main residence, you may also have to pay taxe d'habitation. The tax on main residences was abolished in France from 2023, but it remains applicable to second homes. This is particularly relevant to American buyers purchasing a holiday home in France while maintaining their main home in the United States.

There are also taxes associated with buying the property itself. These are commonly referred to as frais de notaire, although they include more than the notaire's professional fee. They cover various taxes, registration charges and other costs involved in completing the purchase. The amount depends on factors including whether you are buying an existing property or a new-build.

If you eventually rent out your French property, the rental income can create additional French tax considerations. Similarly, when you sell, France may tax any taxable capital gain. The France-US tax treaty recognises France's right to tax gains from the sale of real property situated in France.

For American owners, there is another important consideration: buying property in France does not mean that your US tax obligations simply disappear. Depending on your circumstances, you may have reporting and tax obligations in both countries, with the France-US tax treaty helping determine how certain income and gains are treated.

The good news is that you do not need to understand every aspect of French and US taxation before you start looking at property. However, you should understand the likely costs of ownership and take professional advice before making a purchase.

The important thing is to look beyond the advertised property price. When calculating your budget for a French property, allow for purchase costs, annual property taxes, insurance, maintenance and, where applicable, rental and eventual sale taxes.

With these costs understood from the beginning, you can approach buying your French property with a much clearer picture of the true cost of ownership.