3.2. Taxe Foncière in France
This tax is an annual property ownership tax imposed on the owner, whether or not the property is actually occupied by them, or rented out.
The tax is levied on a collective basis by the local, departmental and regional councils towards the funding of local services.
3.2.1. Calculation of the Tax in France
The determination of the amount payable is made by the local councils, including the regional council, but the calculation and collection of the tax is carried out by the central government tax authority.
The basis on which the tax determined is similar to that of the tax d’habitation, although in a more straightforward manner.
So, broadly speaking, the basis of the assessment is the notional rent that the property might be expected to achieve in the open market having regard to the size condition and location of the property.
This amount may not bear any relation to any actual rent that may be being paid on the property as the notional rental values date from 1970.
A formula is then applied to this notional rent based on the income the authorities need to raise.
As might be expected, the level of the tax is higher in towns than in the country and also as between different regions of the country. The amount payable each year varies so much between local tax authorities that it would be meaningless to state an average.
Some local councils also make a separate charge for rubbish collection, in a tax called taxe d’enlèvement des ordures ménagères (TEOM), which is sent out with the taxe foncière. Where the tax is not levied, the costs of rubbish collection are funded from the general budget.
The tax demand is sent out during the third quarter of the year with a specified end date for payment, unless you elect to choose to pay on a monthly or annual basis by direct debit.
The tax demand is called avis d’imposition tax foncière. The detail of the calculation will show you how much of the tax goes to the various councils and who is making the largest increase!
The tax has wide application to all types of property whether residential, commercial, industrial or professional.
Land is also subject to the tax, though to a lesser extent, and there are also exemptions for buildings of an agricultural nature. There is also relief for the planting of new woodland.
In the event you sell a property during the year you are obliged to pay the tax for the full year, although it is not unusual for there to be an agreement with the new owner concerning sharing of the costs, which needs to be incorporated in the sale and purchase agreement.
If you carry out major improvements to the property then you are obliged to notify your local property tax office in order that there can be a revaluation of the property. Likewise with a new construction.
The relevant forms can usually be obtained from the local mairie or contact your tax office responsible for local property taxes, called the Centre des impôts fonciers within 90 days of practical completion. For houses you should use Form H1.
3.2.3. Exempted Properties
New buildings, additions to existing buildings or rural conversions are granted full exemption from the tax for two years, provided the works are declared to the tax authority within 90 days of practical completion. Buildings of a no-domestic nature are only granted partial relief.
3.2.4. Tax Relief
There is an exemption from the tax for certain groups, alhough the net is not cast as wide as that of the local residence tax.
The following groups are granted relief from the tax:
- Persons over 75 years of age, provided they meet the income criteria;
- Registered handicapped persons irrespective of age in receipt of l'allocation aux adultes handicapés (AAH);
- Persons in receipt of the minimum vieillesse, a supplementary pension for elderly persons on a low income;
- Persons over 65 years of age, and less than 75 years, are entitled to a reduction of (at least) €100 in the amount payable, provided they meet their income is below the threshold for eligibility same.
In all cases the relief is subject to the property being your principal residence.
The exoneration does not apply to that part of the tax that related to rubbish collection.
The income limit in 2008 for relief is €9,560 per year for an adult, €14,666 for a couple, as stated on your income tax notice for 2007.
For the purposes of assessment to entitlement your ‘income’ is considered to be your
revenu fiscal de reference. This figure is, of course, always lower than that of your actual gross income.
There is also discretion to the local councils to grant relief on payment of the tax to those on low incomes, but this is not widely adopted because of the importance of the tax on the accounts of these councils. You should check the tax demand you receive to see whether your council had adopted any of the discretionary exemptions.
Top Tip!
If you are a landlord and you are having difficulty in letting a property, or you are carrying out major works that makes it unsuitable for letting, then you can also obtain relief from payment of the tax.
The property must be incapable of occupation or otherwise vacant for at least three months despite your best efforts get it occupied.
Proof of works or attempts to let must be supplied.
If the rent you are seeking is considered excessive you may not be granted relief.
There are two other forms of relief:
i. Energy Conservation - Local authorities also have discretionary powers to grant up to 100% exemption for a period of five years, for those properties built before 1989 where major energy conservation measures are undertaken.
Only those works carried out since January 2007 are eligible, and the cost of the works cannot be less than €10,000 in a single year, or €15,000 over three years.
Top Tip!
Accordingly, if you are planning a major renovation project to an older property, you should make contact with your local authority to find out if they have agreed to grant this relief.
ii. Risk Area - Local authorites also have discretion to grant an allowance of up to 50% of the tax for those properties located in a 'risk area'. These are zones demarcated on the local Plan de prévention des risques (PPR), if such a plan exists at all. Only those properties built in the zone prior to publication of the plan are eligible.
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