Buying Property in France: Why Americans Often Ask the Wrong Question
Introduction
A growing number of American buyers are acquiring property in France, whether as a primary residence, a holiday home, or part of a broader relocation plan. One of the first questions they typically ask is: “Should I buy through an SCI, through démembrement, or directly in my own name?”
While these are legitimate concerns, the problem lies elsewhere: there is no universal structure that suits all American buyers. The right approach depends entirely on the taxpayer’s broader circumstances — their residency status, family situation, estate objectives, and even the value and intended use of the property.
This article explains why the choice of structure cannot be isolated from the rest of the client’s situation, and why proper analysis must precede any acquisition.
1. The Structure Depends on Your Tax Residency
One of the most decisive variables is whether the buyer will be:
a U.S. tax resident,
a French tax resident, or
in a transitional situation between the two.
The implications are profound:
U.S. tax residency may favor certain structures to maintain basis or optimize estate tax exposure.
French tax residency may require anticipating the French wealth tax (IFI), local succession rules, and exposure to French reporting obligations.
Some structures that are efficient in the U.S. become problematic once the buyer becomes French tax resident.
Because residency status can evolve over time, the acquisition must be aligned with both the present and future tax landscape.
2. Family and Succession Objectives Matter
Family configuration is often the determining factor.
Key questions include:
Are there children from a previous marriage?
Is it intended that the children participate in the ownership structure?
Should the asset pass to the surviving spouse without constraint?
How important is controlling the asset during one’s lifetime?
Tools such as démembrement de propriété (splitting ownership between usufruct and bare ownership) can be powerful, especially for succession planning. But they may interact poorly with U.S. estate tax if the global estate is large enough to trigger U.S. federal estate tax exposure.
In short, succession goals must be integrated from day one.
3. Your Global Estate Must Be Taken Into Account
The French property rarely exists in isolation.
Its structure must fit within your overall estate, which may include:
U.S. real estate,
revocable or irrevocable trusts,
U.S. life insurance,
retirement accounts (IRA, 401(k)),
investment portfolios,
business interests.
An acquisition that seems tax-efficient from a French perspective may create unexpected consequences in the U.S., especially when interacting with trust rules or estate tax thresholds.
Conversely, a structure chosen solely for U.S. purposes may generate unnecessary French inheritance tax or IFI exposure.
4. Rental Intentions Change the Analysis
If the property will be rented — occasionally or regularly — the structuring options change:
Direct ownership may expose the buyer to local rules and high French tax rates on rental income.
An SCI may be appropriate in certain cases, but not if it generates commercial income (“SCI à l’impôt sur les sociétés”).
Short-term rentals (including Airbnb) add an extra regulatory layer independent from tax considerations.
Rental planning must therefore be integrated at the acquisition stage, not after.
5. For Higher-Value Transactions, Buying Shares May Be More Efficient
For properties owned through companies — often the case for higher-value homes — acquiring the company shares rather than the property itself may drastically reduce transaction costs.
While a direct property acquisition triggers notary fees and registration duties, purchasing shares triggers only legal fees, with no French transfer tax in many cases. This approach can save substantial amounts, depending on the structure.
However, such transactions require meticulous due diligence and specialist review.
6. The Main Options: Direct Ownership, SCI, or Démembrement
In practice, the three classic structures are:
Direct ownership
Ownership through an SCI
Démembrement, either of the property or of the SCI shares
Each option has benefits and drawbacks:
Direct ownership is simplest but least flexible.
The SCI provides governance and succession flexibility but must be compatible with U.S. tax rules (especially for U.S. grantors).
Démembrement can drastically reduce French inheritance tax but requires careful coordination with U.S. estate tax planning.
The optimal solution must be identified through an individualized analysis.
7. Why Early Advice Is Essential
For most American families, French inheritance tax rates are significantly higher than their U.S. counterparts. Getting the structure wrong at acquisition can increase the eventual tax burden far more than the cost of proper legal and tax planning.
A review by a professional who understands both French and U.S. systems is essential before signing the purchase agreement — not after.
Conclusion
When Americans buy property in France, the question is not which structure is “best”, but which structure fits their overall tax residency, estate goals, family situation, and long-term plans. The answer differs for each family, and the consequences of an inappropriate structure can be significant.
What matters is ensuring that the acquisition is coordinated with broader French–U.S. estate and tax considerations, rather than relying on general assumptions or standard templates.
Contact Us
If you are preparing a move to France or reviewing your cross-border structure, feel free to contact us. Our firm advises U.S. and international families on French tax, estate and property matters.