3 top tips for Americans buying a home in Europe: Part 2

In Part 1, I shared three essential tips to help Americans prepare for buying a home in Europe – so you can reduce risks, ensure legal compliance, and make informed decisions that protect your finances and long-term goals.

With your visa in progress and finances sorted, let’s move on to some crucial steps during the buying process: securing legal guidance, understanding your cross-border tax obligations, and making healthcare a top priority.

Line up an attorney

For Americans purchasing a property in a European country, hiring a local English-speaking attorney before signing any paperwork or spending any money isn’t just a smart move; it’s essential. Navigating foreign legal systems, language barriers, and unfamiliar property laws can be overwhelming – and risky – without proper guidance.

Buying abroad should be exciting, not stressful. With a trusted legal expert on your side who represents your interests alone, you’ll feel confident every step of the way. Here’s why:

Laws vary by country

Every European country has unique property laws, taxes, and ownership rules. Your attorney will inform you about local regulations, from zoning laws to inheritance rights, and help you avoid legal issues.

For example, in France, a notaire (public official) is legally required to handle the transaction. They act as a neutral party, ensuring legal compliance, and register the sale with the French government. Meanwhile, in the US the closing process is more decentralised, with title companies involved.

Contracts are binding – even if you don’t understand them

Real estate contracts in foreign countries are typically drafted in the local language and become legally binding upon signing. Your attorney will thoroughly review all documents, translate essential terms, and ensure that your interests are safeguarded before you commit.

Avoid scams and unclear title issues

From fake listings to disputed ownership claims, overseas property fraud does happen. Your local attorney will perform due diligence on the property, confirm title legitimacy, and ensure a clear transfer of ownership.

Navigating bureaucracy

European real estate transactions often involve notaries, tax offices, and government approvals. Your attorney will understand the process and can streamline the paperwork, saving you time and frustration.

Review all tax implications

It's essential to understand the tax implications of buying property abroad as a US citizen. This will help you to avoid costly surprises and make informed investment decisions.

Reporting overseas property purchases

Purchasing property abroad doesn’t automatically trigger US tax reporting. However, certain related financial activities might.

• FBAR (Foreign Bank Account Report): If you open a foreign bank account – for example, to pay for the property or manage rental income – and the total value of all your foreign accounts exceeds $10,000 at any point during the year, you must file an FBAR (FinCEN Form 114).
• FATCA (Foreign Account Tax Compliance Act): If the property is held through a foreign entity (such as a corporation or trust), you may need to file Form 8938. Reporting thresholds vary based on filing status and residency:
  • Living abroad: $200,000 (single), $400,000 (married filing jointly)
  • Living in the US: $50,000 (single), $100,000 (married filing jointly)
    Additional thresholds may apply in some cases.

The property itself is not considered a reportable asset under FBAR or FATCA. However, the foreign financial accounts connected to it – used to purchase the property or receive income – may be.

Mortgage interest deductions

US taxpayers can deduct mortgage interest on a foreign home if it qualifies as a primary residence or second home, just like domestic properties. Key requirements include:

• The mortgage must be on a qualified primary or secondary residence
• Interest is deductible on up to $750,000 of mortgage debt ($375,000 if married and filing separately)
• Interest must be paid to a legitimate lender

Rental income

If you earn rental income from property located outside the US, it's still subject to US taxation and must be reported on Schedule E (Form 1040).

The good news? You can deduct many expenses related to your rental activity, including:

• Property taxes paid to a foreign government
• Mortgage interest
• Depreciation (calculated over 30 years for foreign residential properties)
• Maintenance and repair costs
• Property management fees
• Insurance premiums
• Other direct expenses tied to the rental activity

If you also use the property for personal purposes, different tax rules apply based on the number of days it’s used personally versus rented out.

Contact a currency specialist to discover how they can help you take control of exchange rates when meeting your tax obligations.

 Review health care options

As an American citizen moving to Europe, reviewing country-specific healthcare options is essential to ensure you receive proper coverage and avoid unexpected medical costs.

Most European countries offer universal healthcare – including France, UK, Portugal, Italy and Spain – but access for expats depends on your residency status and local laws. Some systems, such as France and Spain, require registration and contributions to access public healthcare.

Most US health insurance plans, including Medicare, don’t cover international care. So, check if your current provider offers international coverage or travel insurance (usually limited and short-term).

Private insurance is a great option, especially if you're waiting for your residency permit, you want to choose English-speaking doctors, or you want to avoid public wait times. These policies can be customised to cover everything from general doctor visits to major surgeries and repatriation. Trusted international insurers include: Cigna Global, Allianz Care, and Bupa Global.

Once you gain residency, many countries allow you to access their public healthcare. You may need: a residency card or number, proof of address, tax or social security registration. For example, in Portugal, legal residents can access care via the SNS (Serviço Nacional de Saúde). In Italy, you can register with the SSN (Servizio Sanitario Nazionale) and get care at a low cost.