9. Local Property Taxes in France
If you own a property in France, then the local property rates payable comprises two different taxes called the taxe d’habitation and the taxe foncière.
Local authorities also charge rates on business premises, called the taxe professionnelle. If even you work from home, you will still be liable for these rates.
- 9.1. Taxe d’Habitation - Residence Tax
- 9.2. Taxe Foncière - Ownership Tax
9.1. Taxe d’Habitation - French Residence Tax
9.1.1. Liability to the Tax
This is a annual residence tax imposed on the occupier of a property in which they were resident on 1st January of each year.
If the property is your second home, even though you may not physically be resident on 1st January, the tax is still payable, provided the property is capable of occupation.
Thus, the law assumes that if you have the right of occupation of the property, and it is habitable, then the tax is payable.
Nevertheless, where you only use the property for a few weeks a year, and it is otherwise let out as a furnished letting, then you can be exempted from the tax, although you would then become liable for the business tax, the taxe professionnelle.
If you let a property on an annual basis, the tax is payable by the tenant.
Tenants of holiday lettings do not pay the tax, but any tenant occuping the property on 1st Jan on a permanent, or even semi-permanent basis, is liable for the tax. The rule applies whether the property is furnished or unfurnished.
9.1.2. Calculation of the Tax
The determination of the amount payable is made by the local and county councils, but the calculation and collection of the tax is carried out by the central government tax authority.
The formula for the calcuation is pondorously complex but, broadly speaking, it is based on the notional rent that the property might be expected to achieve in the open market, having regard to the condition, size and location of the property.
This amount may not bear any relation to any actual rent that may be being paid on the property and, indeed, the notional rental values have not been updated since 1970, so are now desperately out of date!
A formula is then applied to this notional rent based on the income the authorities need to raise.
Accordingly, the amount of tax will vary dependant on the decisions of each commune and the size and condition of each property.
You will not be able to establish the notional rental value used by the tax authority from the tax notice, as it is not stated on it. If you wish to check you will need to visit your local Centre des Impôts Fonciers (Service de Cadastre), whose contact details are given on the tax notice.
As might be expected the level of the tax is higher in towns than in the country. The amount payable each year varies so much between local tax authorities that it would be meaningless to state an average.
The tax demand is sent out towards the end of each year with a specified end date for payment, unless you elect to choose to pay on a monthly or annual basis by direct debit. You can also pay it via the internet, or by cheque.
If you move into the property mid-way through the year, then the former occupier is legally responsible for the tax for the whole of that year, subject to any private agreement that may be made.
Top Tip!
If you carry out major works to your property you are required to advise the tax authority (Form IL 6704), who will then undertake a revaluation of the property. The revaluation will be necessary if the works increase by at least 10% the rateable value of the property.
9.1.3. Exempted Properties
By definition, the tax is not payable if the property is not occupied.
However, the definition of 'occupation' used by the tax authority includes those properties capable of occupation. Ordinarily, this would imply that there would need to be furniture in the property, and that utility services were also available.
Local authorities have discretion to exempt chambres d'hotes and classified gîtes located in rural development areas (Zones de Revitalisation Rurale (ZRR) from the tax. You would need to approach your local mairie. You can also download the application form here.
In certain cities and towns - Paris, Toulouse, Lyon, Montpellier, Cannes, Grasse, Antibes, Nice - the tax is payable on a property that has been empty for at least 5 years, with an additional penalty of 50% of the tax for those empty for at least ten years.
Other local authorities also have the discretionary power to levy a similar penalty, although in their case, the property need only be empty for two consecutive years, commencing 1st January.
In either case, the levy will not be applied if the property is empty because it is considered uninhabitable, and costs of the works exceed by 25% the value of the property.
Likewise, if you are landlord of a property you have tried without success to let you will not be obliged to pay the tax+penalty, but you will need to demonstrate evidence of your efforts to try and let the property, and to have done so at a local market rent.
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here.9.1.4. French TV Licences
If you also have a television then the TV licence, called the la redevance audiovisuelle, is also payable with the tax d’habitation.
The annual cost of the TV licence is €121 (2010), which is subject to an annual index linked increase.
Only one TV licence is payable per household, irrespective of the number of televisions in a property, or the number of properties owned by the same household.
If you are granted complete exemption from payment of the taxe d'habitation, then this will also grant automatic exemption from payment of the TV licence.
9.1.5. Tax Relief
A reduction in the amount of tax payable, or complete exoneration from the tax, is available to certain groups of persons, provided the property is their principal home.
Where you have children, then relief of 10% to 15% for each dependant is granted, an allowance that is not means tested.
Complete exemption from the taxe d'habitation is granted to:
- i. Persons over 60 years of age;
- ii. Widowed persons irrespective of age;
- iii. Disabled, and in receipt l'allocation aux adultes handicapés (AHH) or;
- iv. Infirm/disabled and incapable of gainful employment;
PROVIDED in each case the property is your principal residence, your annual income is below the eligible threshold, and you are not liable for French wealth tax. Accordingly, you will not be eligible if you are 'asset rich, but income poor'. In the case of a married couple the age or disabled condition only needs to be met by one of the spouses.
The applicable income limits for 2009 are based on your net income for 2008 (
revenu fiscal de reference), which cannot be greater than €9,837 for one person and €15,091 for a couple, a figure increased for additional family members.
Table: Income Thresholds
| 1 |
€9,837 |
| 1,5 |
€12,464 |
| 2 |
€15,091 |
| 2,5 |
€17,718 |
| 3 |
€20,345 |
It is also conditionable upon you not living with someone (eg son/daughter) who has an income above the eligible threshold.
If you do not fall into one of the above groups but you are on a modest income then a ‘cap’ is placed on the amount of tax that you need to pay.
The calculation of any such cap is complex but, to benefit, your income cannot exceed €23,133 per year for one person or €32,791 for a couple, with further increases for children.
Normally, these reductions and exonerations are
granted automatically by the tax authority on the basis of information obtained from you annual income tax return. So you do not need to apply to receive entitlement.
Those in receipt of the social security benefit Revenu de Solidarité Active (RSA) also normally receive complete exoneration from the both the taxe d'habitation and la redevance audiovisuelle.
If you think you may be entitled to tax relief, which has not already been accorded to you by the tax authority, then you should visit your local Centre d’impôts and discuss your circumstances with them.
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