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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 taxe professionnelle.
3. iii. Residence Tax - the taxe d'habitation.

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 (the taxe professionnelle) on the rented property. You do not need to be registered with the authorities as a 'professional landlord' to be liable for the tax.

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.

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

i. First, if you let out your main home, or rooms in it, on a seasonal basis then, as a normal rule, you would not be liable for the for the business rates. It 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 and 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

You 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.

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.

Within one month of a tenant vacating their property they are also required to inform the tax authority that they have 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 the tax in the year the tenant vacates, although this is a rule that is not always enforced.

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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