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Discussion Starter · #1 ·
Advice from other ex-pat Americans? I am very happy here - retired, not wealthy, but I could afford a cheap house. Is there any reason I should NOT buy (will it mess up my tax filing - I'm leaning on the reciprocal tax treaty so I will continue to just file in the U.S. I only have a small pension coming in as income.) My rental is becoming a problematic place and I feel that owning a small cottage would at least put maintenance and noise levels within my control a bit. Is there a big pitfall that I don't know about? All advice gratefully appreciated. Thanks.
 

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No problem to you buying a place in France - but what visa are you on? Normally speaking, if your usual place of residence is France, you should be filing French tax declarations in addition to your US tax returns. (You never outgrow your need to file US returns, until and unless you renounce your citizenship!)

Owning a home or having a French mortgage won't really have much of an effect on your US returns - and in fact you may be able to deduct your mortgage interest on your US return. For French purposes, you want to be filing a declaration even if you won't owe any taxes (which you probably won't). The avis d'imposition is often requested as "proof" of your income and in any event, it will be taken into account when figuring your taxe d'habitation (probably in your favor).

Foreign mortgages are NOT reportable on any of the FBAR, FinCen or any of the other FATCA related tax forms so many US expats are all lathered up about. So honestly, there's no particular reason not to do it. And frankly, filing French declarations may actually prove to be to your own advantage.
Cheers,
Bev
 

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Hi,
Depending on your family situation , you could have problems with the french forced heirship law ; ie. you cannot leave property to whom you choose if you have children. If you have no close relatives your heirs will be charged 60% inheritance tax on the property , which unlike liquid assets cannot follow you if you relocate to a kinder fiscal environment.
 

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Discussion Starter · #4 ·
Thank you so much for this. I am divorced and have two daughters (in the U.S.) to whom I would split inheritance equally, so that's fine...the 60% inheritance tax would apply to them??? or since they are as close as relatives can be, would they avoid that? I suppose the trick here is to live just long enough to sell the place before I check out (dusting crystal ball as I type) ?
 

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Discussion Starter · #5 ·
No problem to you buying a place in France - but what visa are you on? Normally speaking, if your usual place of residence is France, you should be filing French tax declarations in addition to your US tax returns. (You never outgrow your need to file US returns, until and unless you renounce your citizenship!)

Owning a home or having a French mortgage won't really have much of an effect on your US returns - and in fact you may be able to deduct your mortgage interest on your US return. For French purposes, you want to be filing a declaration even if you won't owe any taxes (which you probably won't). The avis d'imposition is often requested as "proof" of your income and in any event, it will be taken into account when figuring your taxe d'habitation (probably in your favor).

Foreign mortgages are NOT reportable on any of the FBAR, FinCen or any of the other FATCA related tax forms so many US expats are all lathered up about. So honestly, there's no particular reason not to do it. And frankly, filing French declarations may actually prove to be to your own advantage.
Cheers,
Bev
What a great response, Bev. I seem to have come to the right site! I'm here on a residence visa/retiree status...non-working/carte sojourn. Since I have no income here (other than a small pension from the U.S. and in a couple of years my Social Security) I didn't realize that I had to file here...was just going to file in the U.S. I'll be sure to look into the declaration. Does a Notaire work on that (they seem to do just about everything!)

I have managed to open a bank account, and am just now filling in all those forms. I think we get lathered up about it because of that sense that Uncle Sam is trying to reach across the pond and pull back even more of our hard-earned cash. ;p

This is great news...I'm actually going to look at a little property tomorrow (and the operative word here is 'little.' I won't buy anything I can't afford to pay for outright...so, 'little'! I had an accountant back in the states look at my situation and tell me - ominously - "You don't have enough money to be retired and you absolutely can't make any mistakes." He was completely negative about the concept of my moving here to France and trying to talk me out of it. I think he was wrong on every level, but those words do echo in my brain, making me hypersensitive to my potential for making a bad decision and nothing scares an American more than the letters I.R.S.!

Thank you again for your excellent information!

Mary
 

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I think you'll find that the Fisc (French tax authority) is quite a bit more easy going than the IRS, especially if you're up front and above board with them from the start. That Avis d'Imposition comes in handy for lots of things down the line, especially one that shows 0 taxes due.

As far as the inheritance is concerned, yeah your daughters will be subject to some outrageous level of inheritance tax (only spouses escape it altogether) but if that's a concern, you can always look into taking out an insurance policy to cover the taxes if one or both of the daughters is interested in keeping the house after you're gone. (Or, as my husband is fond of saying, "it won't be my problem at that point, anyhow.")
Cheers,
Bev
 

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Discussion Starter · #7 ·
I think you'll find that the Fisc (French tax authority) is quite a bit more easy going than the IRS, especially if you're up front and above board with them from the start. That Avis d'Imposition comes in handy for lots of things down the line, especially one that shows 0 taxes due.

As far as the inheritance is concerned, yeah your daughters will be subject to some outrageous level of inheritance tax (only spouses escape it altogether) but if that's a concern, you can always look into taking out an insurance policy to cover the taxes if one or both of the daughters is interested in keeping the house after you're gone. (Or, as my husband is fond of saying, "it won't be my problem at that point, anyhow.")
Cheers,
Bev
Haha...love your husband's take on it! :) Thanks so much! :)
 

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Hi,
Depending on your family situation , you could have problems with the french forced heirship law ; ie. you cannot leave property to whom you choose if you have children. If you have no close relatives your heirs will be charged 60% inheritance tax on the property , which unlike liquid assets cannot follow you if you relocate to a kinder fiscal environment.
what's happened to the new law this summer allowing you to make you will under the laws of your nationality ?
 

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We too thought about buying outright. But after looking into a French mortgage, we discovered they were pretty cheap, lowered our exposure to exchange rate risk, and kept our capital available and working for us.

Of course, depending on your age, you might only be able to get a 10 yr mortgage, because Credit Agricole required it to be paid off by age 70. But we were able to get a 20 yr note @ 2.25% interest - a historically cheap rate, and I think they may even be just a bit lower now. I''d suggest you check into it. Plus, you'll be required to get a credit life insurance policy, so when you check out, your heiresses would inherit the property free and clear - except for a bit of inheritance tax - which, if I take your prior statements into account - probably won't be that much on an inexpensive property.
 

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As far as I know, that law has always applied only to EU nationals. Not to non-EU folks.
<PEDANTIC>
It's not a law, it's an EU Regulation. It will need to be reflected in national laws.
</PEDANTIC>

The Regulation does not specify that it applies only to EU citizens. Legal opinion (yet to be tested) is that it applies to anyone for whom there is a matter of succession within the EU.
 

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Not to get too far off the subject here, but there are loads of rules within the EU framework that forbid discrimination on the basis of nationality and in practice it seems that what they really mean is only if you have an EU nationality.

Whatever the inheritance regulation is, it has been promised here in France (meaning it has been adopted in French law) every summer for the past couple of years and never manages to materialize. I haven't followed it that closely because I have no heirs to worry about (and not much in the way of an estate to pass on anyhow). But I would not count on any of the provisions you have "heard about" until it is firmly in place and functioning.
Cheers,
Bev
 

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Thank you so much for this. I am divorced and have two daughters (in the U.S.) to whom I would split inheritance equally, so that's fine...the 60% inheritance tax would apply to them??? or since they are as close as relatives can be, would they avoid that? I suppose the trick here is to live just long enough to sell the place before I check out (dusting crystal ball as I type) ?


Hi,
In your case there is no problem , you should make a french will -(you can do it yourself - all in your own handwriting , dated and signed - but NO WITNESS signatures- take to a notaire who will check it and register it for a small fee)- leaving the house , and if french resident , the rest of your assets, equally to your daughters. They will each have 100 000€ tax-free and then pay tax of slightly less than 20% on the rest.
Even if you had no will , with no other descendants, your daughters would automatically inherit.
 

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Discussion Starter · #14 ·
Thanks so much for that thought...I'll definitely think about it, but yes...I'm in that 10 year time frame, and with the rate conversion as it is right now, perhaps would be as well off to just bring money in to pay it right now. ...nonetheless, a great point. and is that your mortgaged castle behind the cute red car? :)
 

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Discussion Starter · #15 ·
Hi,
In your case there is no problem , you should make a french will -(you can do it yourself - all in your own handwriting , dated and signed - but NO WITNESS signatures- take to a notaire who will check it and register it for a small fee)- leaving the house , and if french resident , the rest of your assets, equally to your daughters. They will each have 100 000€ tax-free and then pay tax of slightly less than 20% on the rest.
Even if you had no will , with no other descendants, your daughters would automatically inherit.
Excellent! Just to make it perfectly clear, I'll do the will with the Notaire's registration when I find a house and have a Notaire to deal with on all that paperwork. Thank you so much for the followup.
 

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Discussion Starter · #16 ·
We too thought about buying outright. But after looking into a French mortgage, we discovered they were pretty cheap, lowered our exposure to exchange rate risk, and kept our capital available and working for us.

Of course, depending on your age, you might only be able to get a 10 yr mortgage, because Credit Agricole required it to be paid off by age 70. But we were able to get a 20 yr note @ 2.25% interest - a historically cheap rate, and I think they may even be just a bit lower now. I''d suggest you check into it. Plus, you'll be required to get a credit life insurance policy, so when you check out, your heiresses would inherit the property free and clear - except for a bit of inheritance tax - which, if I take your prior statements into account - probably won't be that much on an inexpensive property.
and....Torner...I put up a post responding, but it moved later in the feed. You'll laugh, but this is the first time I've every done this posting questions and answers on a forum board. Wow, huh?!! :confused2:
 

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But we were able to get a 20 yr note @ 2.25% interest - a historically cheap rate, and I think they may even be just a bit lower now. I''d suggest you check into it.
I heard on the radio the other day that Europe has a problem with these historically low interest rates in France and wants to intervene. I don't know if they will and when they will do it because we already bought our house so I wasn't paying attention. But keep in mind you may not have heaps of time.
 

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HappyinFrance said:
and is that your mortgaged castle behind the cute red car? :)
No, that's the city of Saumur's mortgaged castle. It was sliding into the Loire, and they had to pump a few million euros into shoring it up over the last decade. Our apartment is just across the park, and down the hill from it - and not in the direction that it was sliding down.
 

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HappyinFrance said:
and....Torner...I put up a post responding, but it moved later in the feed. You'll laugh, but this is the first time I've every done this posting questions and answers on a forum board. Wow, huh?!! :confused2:
Better bookmark it then. I get some of my best information from this forum, and it was extremely helpful when we first decided to move over. It'd be nice if there was a "Frequently Asked Questions" section, because we see many similar questions crop up, but no one seems to mind, and every question generally gets an answer, or at least some advice.

And Bev, the moderator, is outstanding. If she got a euro for each reply she makes, she might have a castle herself. ;-)
 

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Discussion Starter · #20 ·
No, that's the city of Saumur's mortgaged castle. It was sliding into the Loire, and they had to pump a few million euros into shoring it up over the last decade. Our apartment is just across the park, and down the hill from it - and not in the direction that it was sliding down.
Wow! I'm particularly glad you're not down-slope from it! Expensive shoring up, but it certainly is beautiful. :)
 
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