We advise on the structure of your property holding, taking estate planning considerations into account, including forced heirship, as well as income tax, wealth tax, gift tax and estate tax considerations. We create the French and/or U.S. entity(ies) necessary to implement the structure. We create appropriate holding structures to deal with the issues of French “forced heirship” rules.
Purchasing a French Residence or Property for Rental
- We will open the purchase or sale file with French Notaire. (The Notaire is a French jurist who prepares documents and implements the passage of title, and is required to intervene in any title issues—from purchase and sale of real estate to transfers of property by gift or bequest). We render an invaluable service for the client by identifying and clarifying issues related to the property. We often advise the Notaire as to what issues need to be addressed.
- We will guide you through all steps of the purchase process, including:
- Explain the purchase process and all of its component steps.
- Explain the tax implications of owning property or renting property in France.
- Set up holding company structures for ownership of French real estate and U.S. real estate.
- If requested, we will assist in negotiating the final price.
- We negotiate the purchase option (“promesse d’achat”), if applicable, and the purchase and sale agreement (“promesse de vente” also known as the “compromis de vente”). These steps are crucial, as they determine the elements of the deal and are often irrevocable and unalterable.
- We review all documents and negotiate issues as and when they arise.
- We advise on the special considerations for fractional share purchases (and sales).
- We advise on the tax consequences of renting furnished or unfurnished.
- We take on all information reporting of ownership, including avoidance of the 3% annual tax on the value of the property, on reporting rental income, etc.
Selling A French Residence
- We begin with a comparison of U.S. and French capital gain rules for residents and non-residents.
- We advise on how to minimize capital gains tax, either through use of the French 15-year capital gain exemption rule or maximizing cost basis. We work with the fiscal representative in achieving this goal.
- We advise on the special rule concerning the sale of one’s principal residence. This may take into account a determination of whether you are a French resident for tax purposes.
- We explain the tax rules affecting non-resident sellers, including sales through a legal entity, such as an SCI, S-Corp, LLC, and the like.
- We explain the use and effectiveness of the foreign tax credit.