Rental housing for a French taxpayer: are there tax arbitrage opportunities in the USA?

ABSTRACT

The aim of this paper is to identify tax arbitrage opportunities in the field of rental housing in France and the USA. We conducted tax simulations for investments made in the USA or France. We compared total net rental incomes, capital gains and present investment values based on different tax regimes. Our results show that rental housing in the USA under the Effectively Connected Income classification serves as the best option, as it generates the highest present investment value. We performed several robustness exercises and we showed that our results are strengthened in cases of stronger price appreciation in the USA than in France and in cases of high landlord tax brackets.

KEYWORDS:

• Rental housing
• taxation
• France
• USA

JEL CLASSIFICATION:

• H24
• E62

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ The interest rate was provided by the CAFPI agency in France, and the inflation rate was provided by the French National Statistics Institute.