French Inheritance Tax on Property: A Legacy Guide

TL;DR

Buying a property in France can be more than a lifestyle decision. A villa on the French Riviera, a Provençal country estate or an apartment overlooking the Mediterranean may become a family home that is passed from one generation to the next.

However, British and American buyers should understand that French real estate can be subject to French inheritance tax, known as droits de succession, even when the owners and their children live outside France.

The main points are:

• French property owned by a non-resident can be subject to French inheritance tax.
• Each child normally receives a French tax-free allowance of €100,000 from each parent.
• The remaining taxable amount is charged at progressive rates ranging from 5% to 45%.
• French inheritance tax is calculated separately for each beneficiary.
• A surviving spouse or French PACS partner is generally exempt from French inheritance tax.
• Unmarried partners can face inheritance tax at 60%.
• UK residents may also have to consider UK Inheritance Tax on their French property.
• US citizens and certain US residents may have to include French property in their worldwide estate for US federal estate-tax purposes.
• France has estate-tax treaties with both the United Kingdom and the United States, but treaty relief must be applied carefully.
• Lifetime gifts, a donation-partage, usufruct and bare ownership can sometimes reduce the future French tax burden.
• An SCI can assist with family management and gradual transfers, but it does not automatically eliminate inheritance tax.

French succession planning should ideally begin before the property is purchased, not after the owner becomes elderly or seriously ill.

Buying a French Property to Keep in the Family

International buyers are often attracted to France by the quality of life, architectural heritage and long-term stability of prime real estate.

A waterfront villa in Cap d’Antibes, a Belle Époque residence in Beaulieu-sur-Mer or a country property near Saint-Paul-de-Vence can become much more than an investment. It may become the place where children spend their holidays, grandchildren learn French and the family returns every summer.

For these buyers, the objective is not simply to acquire a property. It is to create a legacy.

That legacy requires planning. A property may have risen substantially in value by the time it passes to the next generation. The children may then inherit an exceptional asset but have insufficient liquid funds to pay the associated inheritance tax.

Without preparation, the family could be forced to take out a loan or sell the property shortly after the owner’s death. Understanding French inheritance tax before purchasing can help avoid this result.

What Is French Inheritance Tax?

French inheritance tax is known as droits de succession.

Unlike some estate-tax systems, French inheritance tax is largely based on the amount received by each individual heir. The relationship between the deceased and the beneficiary determines the available allowance and the applicable tax rate.

The calculation generally involves four steps:

1. Establish the net value of the estate.
2. Determine the share inherited by each beneficiary.
3. Deduct the beneficiary’s available allowance.
4. Apply the relevant progressive tax rates.

The value used is normally the fair market value of the assets at the date of death, less qualifying debts and liabilities.

Can France Tax Property Owned by a Non-Resident?

Yes.

French real estate can remain within the scope of French inheritance tax even when the deceased lived in the United Kingdom or the United States.

French tax guidance states that property situated in France and owned by a non-resident deceased person can be taxable in France. French taxation can extend further where an heir is a French tax resident and has lived in France for at least six of the ten years preceding the inheritance.

This means that changing residence or nationality does not automatically remove French inheritance tax from a villa, apartment or estate situated in France.

The location of the property remains critically important.

The French €100,000 Allowance for Children

Each child normally benefits from a €100,000 inheritance-tax allowance from each parent.

For example, if a father leaves a French property to his daughter, the daughter can normally deduct €100,000 from the value of her inherited share before French inheritance tax is calculated.

If she later inherits assets from her mother, a separate €100,000 allowance can potentially apply.

A child can therefore benefit from a total of €200,000 across the two parents’ estates, provided the transfers occur separately and the allowances remain available.

Previous lifetime gifts may affect how much of the allowance is left. France generally applies a 15-year look-back period when determining whether gift and inheritance allowances have been renewed.

French Inheritance Tax Rates for Children

After the child’s allowance has been deducted, the remaining taxable inheritance is charged at progressive rates:

These are progressive brackets. A child whose taxable inheritance reaches the 30% bracket does not pay 30% on the entire amount. Only the portion falling inside that bracket is taxed at 30%.

The French government provides an official inheritance-tax simulator, most recently verified in May 2026.

Example: A €2 Million French Riviera Villa

Assume a widowed parent owns a French villa with a net taxable value of €2 million and leaves it equally to two children.

Each child inherits:

€2,000,000 ÷ 2 = €1,000,000

Each child deducts the €100,000 allowance:

€1,000,000 − €100,000 = €900,000 taxable

Using the progressive French rates, the inheritance tax would be approximately €212,000 per child.

Together, the two children could therefore face a French inheritance-tax bill of approximately €424,000.

This is an indicative calculation only. The final liability may be affected by:

• existing mortgages;
• deductible estate debts;
• previous gifts;
• the ownership percentage of each parent;
• the matrimonial property regime;
• usufruct arrangements;
• other estate assets;
• and any applicable international tax treaty.

The example nevertheless demonstrates the liquidity problem that can arise. The children may inherit a valuable property without inheriting enough cash to pay the tax.

A Surviving Spouse Is Generally Exempt

A surviving married spouse is generally exempt from French inheritance tax.

A French PACS partner is also generally exempt for inheritance-tax purposes, although a PACS partner does not automatically inherit in the absence of a will.

The exemption can make the first transfer between spouses tax-efficient. However, it may merely postpone the inheritance-tax issue until the second parent dies.

The civil-law distribution must also be considered. Depending on the family situation, the surviving spouse may receive full ownership of part of the estate or usufruct over a larger share.

The children may receive bare ownership while the surviving spouse retains the right to live in or rent out the property.

The Risk for Unmarried Couples

Unmarried couples face much less favourable treatment.

A partner who is neither married nor in a PACS may be regarded as an unrelated beneficiary. After a very small allowance, the inheritance can be taxed at 60%.

The surviving partner may also have no automatic inheritance rights.

This creates a serious risk for couples who buy French property together but never formalise their relationship or prepare appropriate wills.

Simply placing both names on the purchase deed may not provide adequate protection. The ownership percentages, acquisition structure, wills and cross-border tax consequences must all be reviewed.

French Succession Law Versus French Inheritance Tax

International owners often confuse succession law with inheritance taxation.

They are separate subjects.

Succession law determines:

• who inherits;
• whether children have protected rights;
• the powers of the surviving spouse;
• and how the estate is distributed.

Inheritance-tax law determines:

• which country may impose tax;
• which beneficiary is taxed;
• which allowance applies;
• and the applicable rate.

Under the EU Succession Regulation, the law of the deceased’s habitual residence generally governs the succession. A person may often choose the law of their nationality in a valid will.

A British or American citizen living in France may therefore be able to choose the law of England and Wales, Scotland, Northern Ireland or a particular US state, depending on their nationality and circumstances.

However, a choice-of-law clause does not determine taxation. Selecting English or American law does not make French inheritance tax disappear.

Specific Considerations for UK Buyers

The United Kingdom changed its Inheritance Tax framework on 6 April 2025.

Under the new system, exposure to UK Inheritance Tax on overseas assets is based principally on long-term UK residence rather than the former domicile and deemed-domicile framework.

A person who qualifies as a long-term UK resident may have non-UK assets, including French property, included within the scope of UK Inheritance Tax. HMRC confirms that foreign assets owned outright can be subject to UK Inheritance Tax where the owner meets the long-term residence test.

A UK owner may therefore face:

• French inheritance tax because the property is in France; and
• UK Inheritance Tax because the owner falls within the UK’s worldwide estate-tax regime.

France and the United Kingdom have a convention intended to relieve double taxation on estates. Relief may also be available under domestic rules. HMRC confirms that double-taxation conventions can prevent or reduce two countries taxing the same property on death.

The treaty does not mean that no tax is payable. It generally allocates taxing rights or provides a credit for qualifying tax paid in the other country.

The calculation should be undertaken by advisers who understand both French succession tax and the post-April 2025 UK residence rules.

Specific Considerations for US Buyers

The United States has no general federal inheritance tax imposed directly on the child receiving an ordinary inheritance. However, it does have a federal estate-tax system imposed on the transfer of a deceased person’s estate.

US citizens are generally subject to US federal estate-tax rules on their worldwide assets, even when they live outside the United States. The IRS expressly states that US citizens can be subject to US estate taxation on worldwide assets.

French property owned by a US citizen may consequently be relevant in both countries:

• France may tax the property because it is situated in France.
• The United States may include it in the owner’s worldwide estate.

France and the United States have an estate and gift tax treaty. The IRS lists France as one of the countries with which the United States has an estate and gift tax treaty.

The treaty may provide credits or rules for determining which country has the primary right to tax a particular asset. Its application depends on citizenship, domicile, residence, the location of assets and the identity of the beneficiaries.

US state-level taxes should also be checked. Some states impose their own estate or inheritance taxes, although the owner may no longer be domiciled in that state.

US Reporting by the Beneficiary

An American beneficiary does not normally treat an inheritance as ordinary federal taxable income merely because it has been received.

However, reporting obligations can arise.

A US person receiving a large bequest from a foreign person or foreign estate may need to file Form 3520. The IRS confirms that US persons receiving large foreign gifts or bequests may have a Form 3520 reporting obligation.

The reporting is particularly important because penalties for failing to report qualifying foreign gifts or bequests can be substantial.

The beneficiary may also later owe capital-gains tax if the French property is sold.

For US tax purposes, the basis of inherited property is generally its fair market value at the date of death, subject to exceptions and consistency rules.

France uses its own rules when determining any French capital gain. A future sale therefore requires coordinated French and US advice.

Usufruct and Bare Ownership

A widely used French estate-planning method is to divide ownership into:

• usufruct — usufruit; and
• bare ownership — nue-propriété.

The usufruct holder normally has the right to occupy the property or receive rental income.

The bare owner holds the underlying ownership but cannot normally use the property without respecting the usufruct holder’s rights.

Parents may give bare ownership to their children while retaining usufruct. The taxable value of the gift is based on an official age-related scale. The younger the usufruct holder, the lower the taxable value of the bare ownership tends to be.

When the usufruct ends on the parent’s death, full ownership normally consolidates in the children’s hands without a second transfer tax on the extinguished usufruct.

This can be highly effective, but it is a genuine transfer of ownership. The parents cannot later sell the complete property, increase the mortgage or restructure ownership without considering the children’s legal rights.

For US persons, a French usufruct arrangement may also create complex US gift, estate, trust-classification and reporting issues. A French strategy should therefore never be implemented without parallel US advice.

Donation-Partage and Lifetime Gifts

A donation-partage is a French notarial arrangement through which parents give and divide assets among their children during their lifetime.

It can provide:

• greater certainty over who receives what;
• use of lifetime gift-tax allowances;
• reduced risk of disputes;
• gradual transfer of a family property;
• and earlier transfer of future appreciation.

A donation-partage may involve full ownership, bare ownership or other property interests.

Timing matters. French allowances can generally renew after 15 years. Families who begin planning early may therefore use allowances more than once.

For British and American families, the transaction must also be examined under the home country’s gift-tax and estate-tax rules. A French lifetime gift may be beneficial in France but produce a less favourable result in the UK or US.

Does an SCI Solve the Problem?

An SCI, or Société Civile Immobilière, is often used to own and manage French family property.

Rather than owning the building directly, family members own shares in a French civil property company.

An SCI can make it easier to:

• divide ownership into smaller percentages;
• transfer shares gradually;
• establish voting and management rules;
• regulate transfers outside the family;
• and avoid some practical problems of direct co-ownership.

However, an SCI does not create a general exemption from inheritance tax. The shares remain assets with a taxable value.

An SCI can also create foreign-company reporting issues for UK and US taxpayers. The United States may classify the entity differently from France, while the United Kingdom may apply its own rules to income, gains and inheritance-tax valuation.

An SCI should be selected for genuine family-governance and ownership reasons, not as an off-the-shelf tax solution.

French Filing Deadlines

Where the deceased dies in France, the French succession declaration is generally due within six months.

Where the deceased dies outside France, the general deadline is twelve months.

The declaration is normally filed together with the inheritance-tax payment.

Where French real estate is included in the estate, a French notaire is normally required to establish the property-transfer documentation.

Families should therefore keep sufficient liquid assets available. A succession involving valuable but illiquid property can otherwise place immediate financial pressure on the heirs.

How to Protect a French Property as a Family Legacy

Before buying, British and American purchasers should discuss:

• the identity of the legal owners;
• the percentage owned by each spouse or partner;
• their matrimonial or marital property regime;
• the rights of children from previous relationships;
• whether a French and home-country will are required;
• which national law should govern the succession;
• whether the property should be owned personally or through an SCI;
• whether bare ownership should eventually be gifted;
• how inheritance tax will be financed;
• and what happens if one child wants to sell but another wants to keep the property.

The most successful legacy arrangements combine tax planning with family governance.

Reducing tax is useful, but preventing disputes, protecting the surviving spouse and ensuring the children can afford to retain the property may be even more important.

Conclusion

Luxury French real estate can be an extraordinary long-term family asset. Its value lies not only in potential appreciation but also in the memories and traditions created around it.

However, a legacy property requires a legacy plan.

Children can normally deduct €100,000 from the inheritance received from each parent, but the remaining amount may be taxed in France at rates of up to 45%.

British owners must consider the UK’s residence-based Inheritance Tax rules introduced on 6 April 2025. American owners must consider US federal estate-tax rules, worldwide reporting obligations and the France–US estate and gift tax treaty.

Structures such as lifetime gifts, donation-partage, usufruct, bare ownership and an SCI can be valuable, but only when coordinated with UK or US advice.

The best moment to discuss succession is often before signing the French purchase contract. A well-structured acquisition can help ensure that the property remains what the family intended it to be: a home, an asset and a legacy for future generations.

This article is provided for general information only and does not constitute French, UK or US legal or tax advice. Rules may change, and the result depends on residence, citizenship, domicile, family structure, ownership and previous gifts. Obtain advice from a French notaire and qualified cross-border tax advisers before purchasing, gifting or restructuring French property. Contact the team of Living on the Côte d’Azur for an intyroduction to our extensive network of Englispspeaking experts