3.1. Taxe d’Habitation
The taxe d’habitation is levied by the local and county councils, and is one of three main local taxes used to fund local services (the others being the taxe foncière, and a business tax called the taxe professionnelle).
The tax is a annual residence tax imposed on the occupier of a property in which they were resident on 1st January of each year.
Accordingly, if you let a property, the tax is payable by the tenant. Holiday lettings are exempt, 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.
If the property is your second home, even though you may not physically be resident on 1st Jan, the tax is still payable, provided the property is capable of occupation.
3.1.1. 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paid on the property and, indeed, the notional rental values have not been updated since 1970, so are now desperately out of date!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.
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.
If you carry out major works to your property you are required to advise the tax authority, who will then undertake a revaluation of the property.
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.
3.1.2. 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.
In larger urban areas the tax is now 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.
If you are landlord of a property you have tried without success to let you will not be obliged to pay the tax, but you will need to demonstrate evidence of your efforts to try and let the property.
Local authorities also 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.
Certain other properties are exempt from this rule, notably those undergoing major works.
3.1.3. French TV Licence
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 €116.
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.
3.1.4. 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.
In particular, complete exoneration from the taxe d'habitation is granted to:
- Persons over 60 years of age;
- Widowed persons irrespective of age;
- Disabled or infirm persons.
PROVIDED in each case your income is below an eligible threshold, and that you are not liable to wealth tax (ISF). The eligible thresholds for 2008 are based on your net income for 2007 (your revenu fiscal de reference
), which cannot be greater than €9,560, a figure increased for additional family members.
It is also conditionable upon you not living with someone who has an income above the eligible threshold.
In addition to these reliefs for elderly and disabled persons, if you have children, then relief for each dependant is granted, an allowance that is not means tested. The relief is 10% for each of the first two children, and 15% for the third and subsequent children. Local authorties have the right to marginally increase these reliefs on a collective basis.
Those in receipt of the social security benefit Revenu Minimum d’Insertion - RMI
) also receive complete exoneration from the both the taxe d'habitation
and the la redevance audiovisuelle
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 €22,481 per year for one person, with further increases for children.
Normally, these reductions and exonerations are granted automatically by the tax authority on the basis of information obtained from your annual income tax return. So you do not need to apply to receive entitlement.
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.
Next: Taxe Foncière
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