US resident owning a home in france: Know the Taxes in 2026

Purchasing property in France as a U.S. resident offers an exciting opportunity to enjoy a beautiful overseas investment. However, navigating the French tax system can be daunting, especially for non-resident property owners. Understanding the various taxes and fees is critical to ensuring your investment in French real estate is well-managed and tax-efficient. This guide will help you understand what taxes U.S. residents must anticipate when owning property in France.

1. Property Acquisition Costs (Notary Fees)

When you buy property in France, you’ll be required to pay what is commonly referred to as “notary fees” (frais de notaire). These fees, which encompass a variety of costs, differ depending on whether you purchase an older or a new property.

Older Properties: Acquisition costs for older properties typically range from 7% to 8% of the purchase price. These costs include:
- Registration fees: Approximately 5.80% of the property price goes toward registration fees, which cover taxes and land registration.
- Notary fees: Notary fees themselves make up about 1% of the total acquisition costs.
New Properties or Off-Plan Purchases (VEFA): For new properties, the acquisition costs are lower, usually between 2% and 3% of the property price. However, buyers of new homes also have to pay 20% VAT on the purchase price. Additionally, the registration fees are minimal, typically around 0.7% of the total price.

These fees are paid to the notary in charge of the sale. Though often referred to as “notary’s fees,” the actual legal services make up only a small portion of the overall amount, with taxes and registration fees comprising the majority.

2. Taxes on Rental Income for US resident owning a home in France

As a U.S. resident owning a home in France, you are required to declare any rental income generated from your property in France. Even if you’re not a tax resident in France, rental income must be reported.

Types of Rental Income:
- Unfurnished Properties: Rental income from unfurnished properties is classified as revenus fonciers(real estate income).
- Furnished Properties: Income from furnished properties is considered Bénéfices Industriels et Commerciaux (BIC), or industrial and commercial profits.
Tax Rates: Non-residents, including U.S. residents, face a minimum income tax rate of 20% on rental income from French properties. In addition to this, non-residents must pay social charges:
- CSG-CRDS (Contribution Sociale Généralisée and Contribution pour le Remboursement de la Dette Sociale) are levied at a rate of 17.2%, or 7.5% if you’re affiliated with the social security system of another EU member country, Switzerland, or the UK.

Keep in mind that the U.S.-France tax treaty may affect how your rental income is taxed, particularly in terms of tax credits that could prevent double taxation.

3. Local Property Taxes

Owning a home in France means you will be subject to two types of local property taxes: the Taxe d’habitation(housing tax) and the Taxe foncière (property tax).

Taxe d’Habitation (Housing Tax): This tax now only applies to second homes and is determined based on the property’s cadastral rental value (the estimated rental value used by the tax authorities). It is calculated by multiplying this value by the rates set by the local government. The tax applies to anyone living in or using the property as of January 1st of the tax year.
Taxe Foncière (Property Tax): This tax is paid annually by the property owner, regardless of whether the property is occupied or rented out. The cadastral rental value of the property is again used to calculate the amount due. If you buy a property partway through the year, the seller typically remains responsible for that year’s tax. However, it’s common to negotiate a split of this expense with the previous owner.

4. Real Estate Wealth Tax (IFI) for U.S. Residents

As a U.S. resident owning property in France, you may be liable for the Impôt sur la Fortune Immobilière (IFI), or real estate wealth tax. The IFI applies to individuals who own substantial real estate assets in France.

Scope: The IFI is levied on the net value of real estate assets located in France, and includes:
- Main residences, second homes, rental properties, and land.
- Shares in property investment companies (SCI) or real estate funds (SCPI).
- Shares in companies where you hold more than 10% of the share capital, up to the value of the real estate assets.
Threshold: You are liable for the IFI if the net value of your French real estate exceeds €1.3 million. Debts associated with these assets can be deducted if they were incurred before January 1st of the tax year.
Tax Rates: The IFI is calculated on a progressive scale, with rates ranging from 0.5% to 1.5%. U.S. residents need to ensure they declare this tax, as it is a self-assessed tax. Failure to declare may lead to penalties and back taxes for up to six years.

Key Points for US resident owning a home in France:

Understand Acquisition Costs: Whether buying a new or older property, anticipate between 2% and 8% of the purchase price in notary fees and taxes.
Report Rental Income: If you rent out your property, you are required to declare rental income in France, with taxes starting at 20%, plus social charges.
Local Property Taxes: Be prepared to pay Taxe d’habitation and Taxe foncière, with the potential to negotiate a pro-rata share with the previous owner.
Monitor Wealth Tax: If your French real estate assets exceed €1.3 million, you will be liable for the IFI, with progressive rates up to 1.5%.

Conclusion

Owning a home in France as a U.S. resident can be an enriching experience, but it’s essential to understand the tax implications that come with it. Properly managing acquisition costs, rental income declarations, local taxes, and potential wealth tax obligations will ensure a smooth ownership experience. Consulting a French tax advisor familiar with U.S.-France tax agreements can help you navigate these complexities and avoid costly mistakes. Contact ESCEC International for more informations.