A Guide to Taxes on Property in France
Category: Property > Property Taxes | 30th Mar, 2021
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Below is an explanation of the three main taxes related to property in France.
If you own a property in France, whether it is your primary or secondary residence, you will be liable for property ownership tax, known as “taxes foncières”.
This tax is based on the habitable size of your property, its outbuildings, land and extras such as in- ground swimming pools, as well as the facilities you have in your home (such as number of bathrooms and WCs). When you build or renovate a property, you are obliged to complete a declaration form (H1/H2) for the tax authorities confirming these details. The commune then set a theoretical base annual rental value (which therefore varies from commune to commune and region to region in France) and the commune, department and region all take a percentage of this base value, and quite often a refuse collection contribution, which added together makes up the total taxes foncières bill.
In some communes, there is a partial exoneration over a period of 2 years on new constructions, as long as the declaration is submitted within a period of 90 days.
The second property tax bill you may receive is the habitation tax, known as “taxe d’habitation”. This is payable by the person who lives in or uses the property on the 1st of January of the year in hand – therefore, if you own and live in the property, you will pay the habitation tax; if it is your secondary residence but furnished, even if you are not physically there on 1st January, you are obliged to pay the habitation tax for the whole year; if you rent out the property to a third party, it is the tenant who is liable to pay the habitation tax. If you rent the property as a furnished holiday let, where you also have access to the property when it is not being rented, you are still obliged to pay the habitation tax. Where you have signed a commercial lease with a tour operator or agent who has full use of the property during the year, you would not be liable for this tax.
The habitation tax is calculated using the same theoretical base annual rental value as the taxes foncièÃÂres but various allowances are given according to your personal situation, particularly with regards to how many people live at home and whether you are a low income-earner, all of which are declared as part of your annual income tax return. For non-residents, this information is not available to the tax authorities and therefore the above-mentioned allowances will not be taken into account, giving a premium for non-residents on habitation tax.
In addition to the habitation tax part of the bill, there is a fixed fee for the TV licence added to this bill, known as “redevance audiovisuel”. For residents, there is one fee related to your primary residence. For people in business (including those running a furnished rental activity from their properties), there is a fee per television set, whether or not you take advantage of French television! If you use the television even to receive satellite stations you are obliged to pay the TV licence (although the fee is reduced per set the more sets you own).
If you do not have a television in your home, you must inform the tax authorities so that they do NOT charge this TV licence fee. For properties that are empty of any furniture on the 1st of January in any year, the owner may obtain a written certificate (attestation) from the local town hall (Mairie) or police services, justifying the property was not in use on 1st January and there would therefore be no habitation tax liability in that year (and therefore no TV licence fee either!). This cannot be done retrospectively so would need to be organised for 01/01 of the relevant year.
In the 2017 French Finance Law, the Macron government brought in a new reduction in habitation tax for modest households and a simulation is in place on the tax office website (www.impots.gouv.fr) to work out whether or not you are entitled to a reduction. The reduction was set to be 30% in 2018, 65% in 2019 and 100% in 2020 – obviously, to be confirmed each year as the parliament agrees to this in each Finance Law.
Cotisation Foncière des Entreprises (CFE)
Finally, if you run any kind of business activity from your property, you will be liable for the CFE which is a professional tax. This is not only for people who live in France and have set up a professional business here but also for owners (even non-residents) who have registered a furnished rental activity at the property.
This is calculated on the same base value as the taxes indicated above but if the activity’s revenue is low, it is possible to obtain a reduction and in some communes, if you have a tourist classification certificate (meubléÃÂ de tourisme) you may be exonerated from either the CFE or the “taxe d’habitation” – ie, not obliged to pay both. However, you do need to check with your local town hall to find out whether this is relevant in your particular case as only the commune can decide and they deliberate on this each year, so it can vary from year to year.
If you have signed a rental agreement with an agency or tour operator (who therefore obtain an income from the property), it is the agency or tour operator who will be liable for the CFE and NOT the owner in this case!
In order for the tax office to calculate this tax, you may be obliged to complete a declaration form (CBD) with your local tax office – which relates specifically to any kind of business premises, as well as properties used as furnished lets.
These are basic guidelines related to the three main property taxes – information correct at the time of drawing up this summary
We at France Property Angels hope that you found this information useful. While you are here why not take a look at our Property For Sale in the Alps and the South of France.
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