5. French Property Taxes on Rental Properties

1. 5.1. Furnished Lettings
2. 5.2. Unfurnished Lettings

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5.1. Furnished Lettings

There are three local property taxes/rates for which a landlord of a furnished letting may be liable:

1. i. Property Ownership Tax - the taxe foncière.
2. ii. Local Business Rates - the contribution économique territoriale (CET).
3. iii. Residence Tax - the taxe d'habitation.

In addition, landlords of tourist accommodation (hotels, chambre d'hôtes, camping and caravan sites) are also required to apply to their rates a taxe de séjour, which is payable by their guests. The decision to levy the tax within each commune is at the discretion of each local council.

5.1.1. Property Ownership Tax

All property owners pay the taxe foncière, as this is a tax payable on the ownership of property.

Owners of chambres d’hôtes, gîtes rurales and meublés de tourisme in rural development areas (Zones de Revitalisation Rurale (ZRR) are able to claim exemption from the tax, subject to a general decision of the local councils not to exempt such properties.

This exemption is not available for that part of the property that has shared use between the owner and guests. Only the rooms/space used exclusively by the guests are eligible for the concession.

There is a separate charge for rubbish removal, called the taxe d'enlèvement des ordures ménagères (TEOM), which is normally collected with the taxe foncière. Accordingly, you may need to make separate arrangements for reimbursement of the tax for rubbish removal from your tenant, or accept that this is part of the landlord cost!

5.1.2. Business Rates

As a general rule, if you let out furnished accommodation on a habitual basis, then you are liable for the local business rates (Contribution Economique Territoriale (CET) ) on the rented property.

You do not need to be registered with the authorities as a 'professional landlord' to be liable for the business rates.

This rule applies in all cases where the property is a separate dwelling, but it may also apply if the accommodation comprises rooms in your own house, provided it occurs, as always, on an habitual basis.

Even if you employ no-one nor have separate offices the law states: 'Les contribuables qui n’emploient aucun salarié en France et qui n’y disposent d’aucun établissement mais qui y exercent une activité de location d’immeubles ou de vente d’immeubles doivent déposer leurs déclarations au lieu de situation de l’immeuble dont la valeur locative foncière est la plus élevée au 1er janvier de l’année d’imposition.'

There are three main exceptions to liability to the business rates for landlords.

i. First, if you let out your main home, or rooms in it, on a seasonal basis then the whether or not you are liable will depend on the level of revenue you earn as a proportion of your total revenues, how regularly it occurred, and whether the tax authority considered it to be a secondary activity to your main employment or business.

If you do find the tax authority decide to impose the tax, you should take it up with them and try and contest it. If it is regarded as 'habitual', the local mairie also has some discretion to waive the payment of the tax for such lettings, but you would need to make enquiries to them.

ii. Second, owners of gîtes ruraux affiliated to the Gîtes de France and those with classified meublés de tourisme are able to claim exemption from the local business rates, provided it is part or all of their main residence, and that it is not the main or second home of the tenant.

Local authorities have discretion not to grant this exemption, although only on a general basis, not to individual cases.

More generally, there is also an exemption for up to five years for a new registered business (including chambres d’hôtes) in rural development areas (Zones de Revitalisation Rurale (ZRR) in those communes with less than 2000 inhabitants.

iii. Third, you escape liability if you let out lodgings on a low rental, within the terms set out here.

5.1.3. Residence Tax

Landlords do not have responsibility for the taxe d'habitation, provided the tenant occupies the property as their principal home. The tenant is then responsible for the payment of this tax.

However, if you let out rooms in your own house then you also have a liability for the taxe d'habitation, as the property is your home. This responsibility is shared with the tenant(s), provided they occupy their room on an exclusive basis, as their principal home. If they do not occupy the property on this basis, then you will be entirely responsible for the taxe d'habitation.

Owners of chambres d’hôtes, gîtes rurales and meublés de tourisme in rural development areas (Zones de Revitalisation Rurale (ZRR)) are able to claim exemption from the tax, although this is not an automatic right, as a decision as to whether to apply the exemption within any particular ZRR is at the discretion of each local council.

The exoneration also only applies in relation to that part of the property let out to guests. So if you own a property of 200m2, and let out 50m2, the exoneration will only apply to one quarter of the property.

If you pay business rates on the property then you should not also be liable for this tax.

If you let out separate gîte accommodation, then the landlord is responsible for the payment of the TV licence for each gîte. If you do not pay the tax d'habitation on the gîte(s), then you need to complete Form 3310A. You may be able to get some limited exemption if the gîte is only let out on a limited basis each year.

In the first instance they are (formally) required to obtain confirmation from an outgoing tenant that they have paid their latest residence tax bill, provided, of course, they were occupying the property on 1st January, and it is their principal home, in line with the rules concerning liability to the tax.

If they do not obtain this confirmation, then within one month of a tenant vacating their property the landlord is required to inform the tax authority that the tenant has quit. This period is increased to three months where the tenant quits without the knowledge of the landlord.

If the landlord does not do so, then they can be made responsible for any residence taxes owed by the tenant, although this is a rule that is very prescribed. Thus, they can only be made liable where the tax authority have started collection procedures and they would not be liable whether they have acted in 'good faith' or the tenant has done a moonlight flit.

5.2. Unfurnished Lettings

The landlord is responsible for the local property rates, the taxe foncière, but the tenant pays the local residence tax, taxe d'habitation, if occupied by them on 1st Jan in the year.

There is a separate charge for rubbish removal, called the taxe d'enlèvement des ordures ménagères (TEOM), which is normally collected with the taxe foncière. Accordingly, you may need to make separate arrangements for reimbursement of the tax for rubbish removal from your tenant, or accept that this is part of the landlord cost!

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