Exchange rates, the silent variable in the outcome
A buyer whose income is denominated in another currency buys two things: a property and a currency exposure. That exposure bears on the price, but also on acquisition costs, on annual charges and taxes, on debt service and on the proceeds of resale.
The order of magnitude is worth stating. On an illustrative calculation for a €2,000,000 acquisition, a 10% movement in the exchange rate between the buyer's currency and the euro shifts the cost of the transaction by €200,000, without any property parameter having changed.
Three decisions limit its impact: choosing the currency of the financing, setting the timetable for converting equity instead of being subject to the rate on the date of the deed, and deciding whether the exposure is hedged or accepted. The last is settled with a private banker, before the preliminary agreement.
What entry into France costs
Buying in France as a non-resident is unrestricted, with no prior authorisation, and must go through a notaire (the French public notary). This simplicity says nothing about the cost of entry, which has increased. The 2025 Finance Act authorises the conseils départementaux (county councils) to raise the rate of droits de mutation (transfer duties) from 4.50% to 5.00%, i.e. 0.5 point, from 1 April 2025 to 30 April 2028. As at 1 June 2026, almost all départements apply this ceiling, including Paris and the whole of Île-de-France, the Bouches-du-Rhône, the Gironde and Corsica.
These duties represent around 70% of frais de notaire (notary's fees) on existing property. In 2026, acquisition costs range from 7 to 8% of the price where the rate has remained at 4.50%, to around 8.5% elsewhere. The exclusion provided for first-time buyers (primo-accédants) applies only to a main residence, which rules out most international cases.
Financing is negotiated in a tight market: an average rate of 3.35% over twenty years in September 2026 according to the Observatoire Crédit Logement/CSA, 3.00 to 3.10% for the strongest profiles, and a 10-year OAT (French government bond) above 4%, a level not seen since 2009. A non-resident application adds requirements regarding placement of funds with the bank, guarantees and source of funds.
Taxation of a non-resident's income
A non-resident's French-source rental income is taxed on the progressive scale, with a minimum rate of 20%, to which the prélèvements sociaux (social security levies) are added. A little-known rule lightens the burden: persons affiliated to a compulsory social security scheme of the European Economic Area, Switzerland or the United Kingdom bear only the 7.5% solidarity levy (prélèvement de solidarité), instead of 17.2%. This difference must be demonstrated with proof of affiliation, every year.
The choice between unfurnished and furnished letting can no longer be reasoned as before. Article 84 of the 2025 Finance Act provides that, since 15 February 2025, depreciation deducted under the actual-expenses regime for furnished lettings (régime réel) is added back in calculating the capital gain on sale, including depreciation taken before 2025. The micro-BIC regime (the simplified flat-rate regime for furnished letting income) and student, senior and EHPAD (care home) serviced residences are not affected. The annual benefit of depreciation is therefore clawed back on exit.
Holiday letting has undergone the same tightening. The loi Le Meur of 19 November 2024 reduced the micro-BIC allowance for unclassified furnished tourist accommodation from 50% to 30%, with a €15,000 revenue ceiling, while classified furnished tourist accommodation keeps 50%. Alignment with the taxation of unfurnished letting continues from 2026.
The real-estate wealth tax, an annual holding cost
The IFI (impôt sur la fortune immobilière, the French real-estate wealth tax) applies to net taxable real-estate assets from €1.3 million on 1 January, on a progressive scale: 0% up to €800,000, 0.5% from €800,001 to €1,300,000, 0.7% from €1,300,001 to €2,570,000, 1% from €2,570,001 to €5,000,000, 1.25% from €5,000,001 to €10,000,000 and 1.5% above that. On an illustrative calculation for €5,000,000 of net taxable assets, the scale produces around €35,690, a recurring annual charge that no rental yield offsets on its own.
A point of method. The 30% allowance on the market value of the main residence on 1 January applies to only one residence per household, and it does not apply to a property held by a société civile immobilière (SCI, a French non-trading property company) in which the household lives. An SCI structure therefore has an identifiable cost here.
The taxable base must be documented. The value used is the value on 1 January and is supported by dated comparisons: the Paris median price rose by 1.2% year on year in the first quarter of 2026, the luxury segment by 2.5 to 3%.
Exit: capital gains and surtax
Capital gains realised by individuals are taxed at 19% income tax and 17.2% social security levies. The holding-period allowance follows two schedules: for income tax, 6% per year from the sixth to the twenty-first year then 4% in the twenty-second, full exemption after 22 years; for social security levies, 1.65% per year from the sixth year then an accelerated pace, full exemption after 30 years. This eight-year gap is the main source of misunderstanding in projections.
Two mechanisms complete the calculation. A surtax of 2% to 6% applies above €50,000 of taxable gain. Conversely, after five years the seller may use a flat-rate works allowance of 15% of the purchase price without supporting documents, and a flat-rate acquisition costs allowance of 7.5%. The main residence is exempt.
One practical consequence: the holding period is a price parameter. A sale envisaged after nineteen or twenty years often benefits from being postponed, not for market reasons, but to cross the 22-year threshold. The calculation is made with the notaire, on the basis of the actual purchase price and documented works.
Family governance and succession
An asset held by several people becomes a source of tension as soon as their uses diverge. The question is settled before the acquisition, through the choice of holding structure and through written rules, set out in the articles of association or in a shareholders' agreement rather than in a verbal understanding. Five points must be decided in writing.
- Who decides on works, above what amount and by what majority.
- How charges, annual taxes and periods of occupation are allocated.
- On what terms a family member may exit, at what price and on the basis of what valuation.
- Who represents the indivision (joint ownership) or the company before the notaire, the bank and the authorities.
- Which law and which jurisdiction apply in the event of disagreement.
The French tax framework for inheritance and gifts is stable in its orders of magnitude: an allowance of €100,000 per parent and per child, renewable every fifteen years, applicable to gifts and to inheritances alike; a progressive scale in the direct line from 5% to 45%; up to 60% between unrelated persons. Planning ahead amounts to using an allowance that replenishes itself.
Split ownership (démembrement) remains the central tool. The value of the usufruct and of the bare ownership (nue-propriété) is set by the scale in article 669 of the code général des impôts (French General Tax Code) according to the age of the usufructuary: 60% between 41 and 50, 50% between 51 and 60, 40% between 61 and 70, 30% between 71 and 80, 20% between 81 and 90. On an illustrative calculation for a €3,000,000 property and a 65-year-old usufructuary, the bare ownership transferred represents €1,800,000. On the death of the usufructuary, full ownership is reconstituted without inheritance tax.
Our conclusions
An international acquisition is judged on four points, in this order: currency, cost of entry, holding taxes and exit liquidity. The first three are calculated before the offer. The fourth is assessed by the depth of the target market: in Paris, around 2,800 transactions a year exceed €1 million, of which 800 to 900 are above €2 million, and international clients account for around 60% of the luxury segment. Liquidity is real, but narrow and concentrated on a small number of addresses.
An illiquid asset should be bought for less, failing which the discount shows up on resale. The rule applies to atypical properties and to addresses without comparables.
A final caveat: nothing in the above replaces an examination of the tax treaty between France and the buyer's state of residence, which determines the right to tax, the elimination of double taxation and the treatment of inheritance tax. This point should be examined with a tax adviser on both sides, before the offer.
