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What is the difference between taxe foncière and tax d’habitation

THE SHORT STORY  …

tax foncieres and taxe d'habitation certificatesTaxe foncière is a land tax. The owner of a property pays it even if there are no buildings on the land.

Taxe d’habitation is a residence tax. It is paid by the household living in the property on 1st January, whether it is an owner, tenant, or by the owner if vacant.

Both Taxe foncière and Taxe d’habitation apply to non-residents as well as residents. The tax is often higher on second homes due to possible discounts available on one’s main residence. Demands for both taxes are sent annually. The bills or avis d’impôt start going out in September each year. They must be paid by a specified date, usually in October (Taxe foncière) and November (Taxe d’habitation) but this varies from place to place. Failure to pay on time incurs a 10% penalty.


TAX FONCIERE
THE LONG STORY …

Taxe foncière is a land tax paid by the owner of the property,tax foncieres certificate form irrespective of who actually occupies it. The tax is divided into two parts:

  • the tax on buildings (taxe foncière sur les propriétés bấties)
  • the tax on land (taxe foncière sur les propriétés non bâties)

The tax on buildings is paid on any property that is habitable, whether or not it is occupied and it is levied locally. The tax on land is levied nationally. If you sell a property partway through the tax year taxe foncière is apportioned by the notary during the sale.

 

How is Taxe foncière CALCULATED?

calculator and small french house and euro notesTaxe foncière is calculated in a similar way to tax d’habitation and is based on the notional rent that the property might be expected to achieve in the open market taking into account the size, condition and location of the property. This assessment is then discounted by 50% to take into account running costs, repairs, insurance and so on.

This notional rent may not bear any relation to any actual rent being paid on the property as the notional rental values date back to 1970. A percentage rate is then applied to this notional rent based on the income the authorities need to raise, called the tax d’imposition.

The rate of tax varies marginally according to whether the property is the main home or a second home. In the case of the latter the rate for management costs is higher (3% rather than 1%).

Taxe foncière – EXEMPTIONS

small plastic house on house plans

Exemptions are available against the main home if the occupant is:

  • aged 75 or over on the 1st Jan of the relevant year
  • if the taxpayer is aged between 65 and 75 on the 1st Jan of the relevant year and their taxable income falls below a certain level*
  • the occupant is in receipt of certain disability or old age allowances on the 1st Jan of the relevant year

Exemptions and RELIEFS are also available on:

  • french cow looking at camera on french alps mountainLand used for certain purposes such as farming
  • New builds (that are used as a main residence) are exempt for the first two years after construction (a special Tax Form (H1 or IL) must be filed with the local tax authorities within 90 days of completion** of the property).
  • Renovated properties can benefit from exemptions provided that reconstruction or additional construction work has been carried out and is determined according to the nature and size of the work (a special Tax Form (H1 or IL) must be filed with the local tax authorities within 90 days of completion of the renovation works).
  • There is also partial (50%) or full exemption, for up to 5 years, for new homes constructed to an energy efficiency standard higher than current regulations (this exemption is at the discretion of the local authorities).
  • Older homes that have had important energy conservation works carried out may also be exempt at the discretion of the local authority.

 


TAXE D’HABITATION

THE LONG STORY …

taxe d'habitationTaxe d’habitation is a residence tax. Taxe d’habitation is paid by the household living in the property on 1st January, whether it is an owner or tenant, or by the owner if vacant.

Taxe d’habitation is determined by local and county councils and it is spent on community services by the local municipality such as street lighting and cleaning, local schools, etc..

Taxe d’habitation also applies to mobile homes and caravans if they are the taxpayer’s main residence. The rate is €25 per square meter but it is not due if the surface area is less than four meters squared.


Possible DEDUCTIONS 

  • Taxe d’habiold tv in the corner of a roomtation includes the TV licence fee so if you don’t have a TV it can be deducted from your bill.
  • Taxe d’habitation may include a portion for refuse collection – ordures (if not, a separate bill will be issued for this). In some parts of France refuse collection can take place as often as 3 times a week so if property is your second home you may apply for a reduction on this particular tax.
  • People aged over 60 or widows (no age restriction) who occupy the property as their main residence on the 1st January and whose net taxable income is below €10 686 can apply for a deduction or exemption
  • There are some deductions available for owner occupiers on low incomes or with dependents.


How is
taxe d’habitation CALCULATED?

french monopoly board saying taxe de luxeThe tax is based on a notional rental value for the property multiplied by the tax rate fixed in the locality. It is calculated on the living area of a property, including outbuildings, garages and amenities, and takes into account factors such as the quality of construction, location, renovations, services (e.g. mains water, electricity and gas) and amenities such as central heating, swimming pool, covered terrace and garage. Properties are placed in eight categories ranging from ‘very poor’ to ‘luxurious’.

Changes made to a building, such as improvements or enlargements, must be notified to the land registry within 90 days to ensure they are put into the correct category, which is why it is important to send them notification of any improvements or changes to the property within 90 days.

How is taxe d’habitation & taxe foncière calculated if you are BUYING OR SELLING a property in France?

french flag in 50 euro notesTaxe d’habitation
For the year during which you buy your property, the vendor will be responsible for paying the taxe d’habitation as it is payable by whoever is in occupation on 1st January. Even if you become the owner on 2nd January, this tax will still be his responsibility.

Taxe foncière
For taxe foncière and refuse collection charges there is usually an apportionment between the vendor and the seller according to how long they own the property in that year.

 

** A building is considered complete when it can be used for its intended use even though there may still be some work to do such as decoration. External rendering must be complete and safety features in place, such as balustrades (which is why some new properties are left unrendered for a very long time!).

* For 2015 the taxe foncière maximum income level was €10 686 for the first family quotient unit (limit for a single person) then €2,853 for all extra half units.

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