France property taxes
As French property owners will know there are two annual property taxes the taxe fonciere payable by the owner and taxe d’habitation payable by the occupant.
The French tax authorities intend to abolish the taxe d’habitation on all principal private residences by 2023 and, as part of the process, since 2018 there has been a phased reduction to the tax for households in which the annual income is below certain thresholds.
In 2021 the tax will be reduced by 30% for households with an annual income above the thresholds, followed by a 65% reduction in 2022, with a complete exemption to all properties occupied as the principal private residence in 2023.
Under the current regime high value properties, that is properties where the annual rateable value is more than €4,573, are subject to a surcharge of 60% of the tax due. With effect from 2021 this surcharge will also be abolished.
Where residential properties are let and the tenant occupies the property as his principal private residence no tax will be due, whether from the tenant or the owner. If the tenant rents the property as a second home then tax will continue to be due, as it is under the present rules.
For the owners of second or holiday homes in France the position is less beneficial. The taxe d’habitation will continue to be payable as at present, however, in areas where there is a housing shortage a surcharge of up to 60% of the tax will be payable.
Properties left vacant will continue to be subject to taxe d’habitation.
These changes are part of the reform of funding of the local municipalities and larger departmental authorities. Currently the municipalities receive the proceeds of the taxe d’habitation, with the taxe fonciere being paid to the departmental authority. Under the changes the municipalities will in future be the recipients of the taxe fonciere, with the departmental authorities being funded by a share of general VAT revenues.
As part of the reform, local property rental values which were fixed in 1970 and have only increased in-line with inflation will be subject to review and revision in the course of the coming year. The new rates which will be calculated on the new rateable value are set to be introduced in 2026.
Rosemont considers that this reform will have a detrimental effect on local politics, in that it will cut the financial link between residents and their local mairie, with many of the local costs now only being borne by the home owners in the municipality, as opposed to the residents.
Rosemont provides advice and assistance for foreigners who own property in France or are considering buying French real estate. Please contact us on consulting@rosemont.mc