Purchase in France by a non-resident

Before any real estate investment in France, a foreign national must contact a professional to find out the conditions for the investment in question. Several aspects need to be examined:

The profile of the non-resident buyer

Firstly, it will be required to examine the nationality of the buyer, his country of residence, his personal situation (if he has already lived in France for example) not to mention his matrimonial regime , if he is married. Bearing in mind that the law of the property’s location is the one which applies in matters relating to real estate, the French law shall therefore prevail. The consequences on the purchase will be very significant, in terms of the property’s ownership , its tax regime or its possible resale.

However, it should be noted that in the event of the purchaser’s death, the property isn’t subject to the French law. Since August 17, 2015 (the effective date of the European Regulation which took place on July 4, 2012), it is no longer the law of the property’s location which is applied, in matters concerning inheritance , but the one of the purchaser’s country of residence. Therefore, the latter decides the people who can inherit and sets the payable fees . It should be noted that members of the European Union, but also nationals of foreign countries who have signed a special agreement with France, benefit from special regimes (bilateral agreement, Hague Convention, etc.).

Nothing also prevents the foreign buyer from setting a company to acquire; once again depending on the status which has been chosen, the legal and fiscal regime of the property acquired shall differ.

Financing a property purchase by a non-resident

The acquisition of real estate in France will require significant fund transfers at times. These transfers are verified by intermediaries (Banks, Credit institutions). Notaries must also check the source of funds, in order to prevent money laundering operations. They may be called upon to make declarations, if they have major doubts, in terms of the origin of used funds (TRACFIN). Notaries must also ensure the security of transactions, as they are responsible vis-à-vis the foreign buyer and the seller. It must be mentioned again that they will verify the transfers or the bank wires which are sent to them, not to mention the reliability of the banking establishments which carry out the transfers.

Applicable taxation

The tax system applicable for a property purchased in France must also be explained to the foreign buyer: the cost, the various taxes, and fees . But also, the taxes which will need to be regulated depending on the fact if the property will be used as the main residence or shall be treated as an investment, for rental purposes. The choices that will be made during the purchase will often depend on the taxation which shall be applicable during the ownership of the property or during its subsequent resale (VAT, capital gain, intervention by an accredited representative, etc.). Once again, various systems do exist ranging from exemption to high taxation.

Frequently asked questions