Property investment as a non-resident: financing and key considerations

Financing conditions for investment

When the bank knows the purchase is for investment (rental or resale), it typically adjusts conditions downward. The reason: in case of financial difficulties, the owner prioritises their primary residence over an investment asset.

How much a bank lends, at what rate and over what term is each bank's decision, and there is no public statistic for non-residents. For an investment, plan with 60%, the lowest limit banks publish for this profile, and ask for the FIPRE to learn the real rate and term.

An important point: some banks ask you to declare the intended use in the application. If you say second home and then rent it from day one, there could be issues. Transparency is key.

Yield analysis: real numbers

Gross yield is the annual rent divided by the price, and it changes a lot from one street to the next: calculate it with the real rent of similar flats in the same area. The net yield (after community fees, IBI, management, empty months and tax) can be half the gross figure or less: 2.6% in the example below, whose rent and cost figures are assumptions.

For a non-resident, the additional taxes (IRNR on rental income at 24% for non-EU or 19% for EU) significantly reduce the net return. It is worth running detailed numbers before committing.

Rental taxation for non-residents

Non-residents from the EU/EEA are taxed at 19% on net rental income (income minus deductible expenses). Non-residents from outside the EU are taxed at 24% on gross income (without deducting expenses).

This difference is enormous. A US non-resident renting a property for 1,000 EUR/month would pay IRNR on the full 12,000 EUR gross. A French resident would pay only on the net income after deducting costs.

The return is filed once a year on form 210. It is advisable to engage a tax adviser or agency to manage these obligations.

Remote management: practical options

Managing a rental property from abroad requires planning. The most common options:

Full-service property management agency: they handle everything from finding tenants to repairs, and usually charge a percentage of the rent: get quotes from several and include it in your numbers. The most convenient option but reduces yield.

Self-management with local support: you hire a lawyer/agency for the tax side and a local contact for emergencies. More economical but requires more involvement.

For holiday rentals: platforms like Airbnb or Booking with a local co-host, who also charges a percentage of what you earn. First check that the region and the town hall allow tourist use.