More Americans than ever are buying property in Europe. Some are looking for a holiday home, while others are looking for a Plan B opportunity or already live abroad. Real estate in the EU offers lifestyle perks, an investment opportunity, and, in many cases access to residency or healthcare. In 2026, with the Euro offering value against the dollar and housing markets cooling in many European cities, it’s a buyer’s market for dollar holders.
However, buying property in Europe means dealing with local laws, taxes, and financial risks that can differ substantially from the US. In this article, we provide an overview of the most important legal, financial, and tax issues that Americans should understand before buying a home in the EU.
Why are Americans buying real estate in Europe?
Inflation, political and economic volatility, and lifestyle options are incentivizing more Americans to explore buying real estate in Europe. According to real estate data and relocation firms, US buyers are now leading foreign property purchases in markets like Portugal and Spain. Some are buying vacation homes or retirement havens, while others are securing a Plan B foothold in case of future changes in the States.
A strong US dollar gives Americans significant buying power. In some European cities, with $500,000 you can secure a prime home with views, history, and walkability that would cost millions in New York or LA. Countries like Greece, Italy, and Spain are actively courting foreign buyers with renovation incentives and residency options tied to real estate. While pandemic-era prices surged in cities like Lisbon and Amsterdam, markets have now cooled, presenting an opportunity for American buyers.
Property ownership can also open access to better healthcare systems, Schengen travel, and in some cases, residency or tax privileges.
Local property laws and visas
Each EU country has its own rules for foreign property buyers, and it’s important to research them in the country you’re looking to buy in. Some countries welcome American buyers with minimal restrictions, while others might impose extra taxes, rental limits, or require specific residency status. You should understand who can buy, what can be bought, and what kind of visa or legal presence you’ll need before looking for your dream property.
In Greece, property ownership can lead to investor residency through Golden Visa programs. While Spain and Portugal have scrapped their property versions, countries like Hungary and Cyprus still offer real estate-linked residency. These programs often require a minimum purchase value, clean background checks, and proof of income or health insurance. They don’t automatically lead to citizenship, but they can offer five-year renewable residency with visa-free travel in Schengen.
City-level rules also matter. For example, Amsterdam and Barcelona heavily restrict short-term rentals. Buying in a heritage district may mean higher taxes and limits on renovations. Seek advice from a local bilingual attorney early in the process.
Financing and mortgage options for Americans in Europe
Many Americans buy European property in cash, but financing is an option in most countries. Foreign banks in France, Portugal, and Spain offer non-resident mortgages, for up to 50-70% loan-to-value. Rates vary but are typically lower than US equivalents. Approval requires more documentation however, higher down payments, and proof of income. Local banks may also be reluctant to lend without a European credit history.
Some US banks with international arms such as HSBC or Citibank may finance property abroad, but these loans often have higher rates and may require US collateral. You can also tap US-based home equity to fund your foreign purchase. This can simplify paperwork but adds leverage risk if US property markets fall.
Mortgage interest may be deductible on your US return, up to IRS limits. You’ll need accurate amortization tables, payment records, and the lender’s details. Refinancing is typically harder with foreign properties, so it’s wise to choose conservative loan terms and avoid balloon payments or variable rates.
US tax obligations
Even if you or your property is thousands of miles from the IRS, it’s still subject to US tax reporting rules. If you rent out the home, the rental income must be reported on your US tax return. Expenses like repairs, maintenance, utilities, and depreciation can offset rental income. However, the depreciation period for foreign property is 30 years rather than 27.5 as with US rentals. If you pay foreign tax on rental income, you can claim the IRS Foreign Tax Credit to reduce your US tax bill.
When it comes to selling European real estate, you’ll be liable for US as well as often foreign capital gains tax. Again, you can claim the Foreign Tax Credit to avoid double taxation.
You’ll have additional IRS filing requirements if a European property is held through a foreign corporation, trust, or partnership. These reporting rules are complex, and penalties for missed forms can be high. Work with a US tax advisor who has experience with foreign property ownership and cross-border compliance.
Reporting forms and thresholds
While owning a home directly does not require disclosure, some reporting is required:
FBAR (FinCEN 114)
This form must be filed if your combined foreign financial account balances exceed $10,000 at any point during the year. This includes bank accounts used to pay for property or collect rent.
FATCA (Form 8938)
You must file if the value of your foreign financial assets exceeds thresholds starting at $200,000 (if living abroad) or $50,000 (if living in the US). Directly owned real estate is not included, but foreign partnerships, trusts, or companies holding the property quality.
Form 5471 or 8865
Required if you own a foreign corporation or partnership that holds real estate. These are complex forms and should be handled by an experienced preparer.
Form 3520/3520-A
Needed if you hold property through a foreign trust or receive a gift from a foreign individual that exceeds IRS thresholds.
Failing to file these forms can lead to $10,000+ penalties, even if no tax is due.
Estate planning considerations
Buying property in the EU also affects your estate plan. Your US estate includes all your worldwide assets, including apartments in France, villas in Italy, or commercial real estate in Portugal.
Foreign countries may impose their own inheritance or estate taxes if you have assets there, even if you aren’t a resident. Some impose forced heirship laws, which limit who you can leave the property to, especially in civil law countries like France and Spain.
Make sure your estate plan includes local wills, cross-border powers of attorney, and designated heirs that comply with both US and EU law.
Broader financial planning considerations
Owning real estate abroad can add complexity to your overall finances. Key financial planning issues include:
Liquidity management
EU property is illiquid. Sales can take 6-18 months, especially outside of major cities. Don’t tie up funds you may need for emergencies or other goals, and consider a property purchase as you would any investment in the context of your overall portfolio and financial planning.
Currency risk
Property value, expenses, and future sale proceeds are Euro-denominated. A weaker Euro helps at purchase but could hinder you later. Some buyers hedge currency exposure with multi-currency accounts or forward contracts.
Insurance and risk exposure
Standard US policies won’t cover your EU property. You need local homeowner’s insurance, and if renting it out, landlord liability coverage. Earthquake or flood coverage may also be required in places like Greece or Italy.
Maintenance and operating costs
Create a cash flow plan and budget factoring in ongoing costs like property taxes, condo or building fees, utility contracts, local accounting help, and property management. These vary widely by country and region. In France or Spain, notary and annual upkeep costs can exceed US expectations.
Retirement planning impact
Buying real estate in the EU may affect when and how you retire. If it becomes your primary home, you’ll need to update your financial plan to include residency permits, healthcare options, pension contributions, and a new cost of living. You may also want to set up local banking, investment accounts, or payment solutions. Seek advice from a cross border financial advisor to better understand how you can plan for and optimize your life in Europe.
Exit strategy and legacy
Make an exit plan: Will you rent your European real estate out long-term, sell it in retirement, pass it to heirs, or live in it full-time? Plan for capital needs when exiting, such as property sales costs, capital gains taxes, and your reinvestment strategy.
Practical checklist for Americans buying property in Europe
- Seek advice from an expat financial planning specialist.
- Find a bilingual local property attorney familiar with foreign‑buyer cases.
- Verify visa eligibility and any residency‑by‑investment or tax benefits.
- Research property ownership rules and taxation in your target destination.
- Arrange finance via foreign or US banks, if required.
- Seek advice from a US expat tax expert and a currency broker.
- Keep records of all your acquisition and closing costs.
- Update your estate planning.
How to start as an American buying EU real estate
Buying in the EU offers lifestyle benefits, investment diversification, and the opportunity to explore a new culture. It can provide potential visa status or residency in some countries, and you may enjoy access to local healthcare and other benefits. Risks include currency risk, tax complexity, rental restrictions, and legal complications. Market and currency shifts can also impact values.
Work with professionals who are experienced working with Americans in Europe and who understand both systems. Whether you’re after a beach retreat in Portugal or a Paris pied-à-terre, the key to success is research, advice, and planning.
If you have any questions about your situation or require assistance managing your investments as an American living abroad, get in touch.
This article is for informational purposes only; it is not intended to offer advice or guidance on legal, tax, or investment matters. Such advice can be given only with full understanding of a person’s specific situation.
