Thanks, Tony. I really value your advice and if I ever decide to do anything with fractional share properties in France (other than this half ownership), I’ll seek out your site to advertise it. I frequently look for fractional share properties in a slightly warmer climate and have visited your site for that.

As you requested, I’ll let you know how we end up resolving our issues and will give you any information that I think may be helpful to others.

I have been talking to Andy Sirkin about fractionalizing another property, and will definitely use him for that purpose if I end up pursuing that project. I had not thought about consulting him about these French property issues, but he is very approachable and I won’t hesitate to do so.

As for our French house, we have made our partners an offer, but I think they will want more than we will want to pay. I’m not sure what will happen with the possibility of their selling it to others. I’m sure it will all work out.

I do agree with your opinion that these fractional share purchases should not be done with a mortgage in France. French mortgage terms are much more onerous and restrictive than Americans are used to.

We do pay tax on our rental income in France and also in the US. The French taxes paid are deductible against American taxes. That may be a bit different than in some other countries that have tax treaties with France, as many non-Americans mention that you only must pay in one country. The US government always taxes its citizens on all income earned anywhere in the world. However, it is generous with deductions and credits for foreign taxes paid, which results in only being taxed once on the gain — albeit at the highest rate imposed by the two countries.

I take comfort in hearing that you don’t think the way we’re handling rentals sounds like “trading” by the SCI, and that allowing our partners to sell their shares would likely not result in a different outcome provided we continue in this vein. I will continue to research it and consult insured professionals, as you advise.

My understanding was that Andy Sirkin usually recommends not using the SCI structure at all in France — just using a homeowners association — but I may have his ideas confused with someone else’s. Everyone seems to have a different idea. I was delighted to learn from your blog that he is pursuing an opinion letter from the French tax authorities. This area is far too vague and uncertain and needs to be clarified.

Like you, I would be concerned about using a foreign corporation - even a nonprofit homeowners association — to own all of the shares of the SCI (or all but one of the shares since I think you may need two shareholders at least). I’m no expert at this, but I would be concerned that the issue of imputed income for use of the property by the shareholders might arise from that structure.

It was so nice to talk to you by email. Thanks very much for your thoughts.

Lynda