Guide to Letting Property in France


5. French Property Taxes on Rental Properties

  1. Furnished Lettings
  2. Unfurnished Lettings

5.1. Furnished Lettings

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

  1. Property Ownership Tax - Taxe Foncière.
  2. Local Business Rates - Contribution Economique Territoriale (CET).
  3. Residence Tax - 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.

However, owners of a chambre d’hôte or meublé 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 council not to exempt such properties. Most councils grant exemption, but you need to check with them.

You need to make application by submitting each year Form 6671-D-SD/Cerfa n° 15532 to your local tax office before 31 Dec. The application can also be made on-line through your account.

The exemption is only for that part of the accommodation that is used exclusively for letting purposes, and only provided the property is either part of your principle residence or second home.

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!

Gite owners need to read our Newsletter article Tougher Controls on Rural Gîte Tax Breaks.

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 rental property, although many are exempt.

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.'

Exemptions

Despite the general rule, Article 1459 of the tax code provides for several exemptions from business rates , stating:

Sont exonérés de la cotisation foncière des entreprises :

1° Les propriétaires ou locataires qui louent accidentellement une partie de leur habitation personnelle, lorsque d'ailleurs cette location ne présente aucun caractère périodique ;

2° Les personnes qui louent ou sous-louent en meublé une ou plusieurs pièces de leur habitation principale, sous réserve que les pièces louées constituent pour le locataire ou le sous-locataire en meublé sa résidence principale, et que le prix de location demeure fixé dans des limites raisonnables ;

3° Sauf délibération contraire de la commune ou de l'établissement public de coopération intercommunale doté d'une fiscalité propre :

a) (abrogé)*

b) Les personnes qui louent en meublé des locaux classés dans les conditions prévues à l'article L. 324-1 du code de tourisme, lorsque ces locaux sont compris dans leur habitation personnelle ;

c) Les personnes autres que celles visées aux 1° et 2° du présent article ainsi qu'au b qui louent ou sous-louent en meublé tout ou partie de leur habitation personnelle.

Accordingly, there is a permanent, non-qualified exemption in the following cases:

  • Where your turnover is less than €5,000 a year;
  • Non-periodic lettings of a main or secondary residence are also exempt, provided the owner occupies the property outside the letting period;
  • Lodgings let at a reasonable rent as the principal residence of the occupant within the terms set out here.

In addition, subject to no contrary decision of the local council where the property is located also exempt are:

  • Owners of a chambre d'hôte or classified gîte accommodation (meublé de tourisme);

  • Letting of main or secondary residence where the property not classified as a meublé de tourisme;

PROVIDED in each case the property is part of their 'habitation personnelle'. That is to say either their main residence or a secondary residence they use when not otherwise let.

Some local councils will exempt both, whilst others only classified accommodation, whilst others grant no exemption.

As a result, you may need to find out from your local council their position on such lettings. What is clear is that unless the property is either your main or secondary residence, you would be liable for the business rates, subject to the national exemptions above.

The law and practice on the local taxes is a little complex because landlords who let on a seasonable basis could potentially be liable for both the taxe d'habitation and business rates (cotisation foncière des entreprises).

To avoid this double imposition, Article 1407 of the tax code states: ne sont pas imposables à la taxe [d’habitation] : 1° Les locaux passibles de la cotisation foncière des entreprises lorsqu'ils ne font pas partie de l'habitation personnelle des contribuables.

Accordingly, where an owner is liable for business rates, they would not pay the taxe d'habitation . Where the property is not part of their residence, main or secondary, they pay the business rates, subject to exemptions above. One or other of the taxes is, however, payable, except where the property is let on a permanent basis.

Whether it would be cheaper to be liable for the taxe d'habitation or the cotisation foncière des entreprises is a question of local determination, but the latter is often the more economic solution.

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.

Owners of a chambres d’hôte or a meublé de tourisme in rural development areas (Zones de Revitalisation Rurale (ZRR)) are able to claim exemption from the tax, as well as exemption from the taxe fonciere 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.

You need to make application by submitting each year Form 1205-GD-SD/Cerfa 13567 to your local tax office before 31 Dec.

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

Commencing 2018, the government began abolition of the taxe d'habitation for principal residences.

You can read more about the phased abolition of this tax in our page Taxe d'Habitation 2019

If you let out separate meuble de tourisme 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.

A landlord has certain legal obligations concerning the residence tax when a tenant vacates their property.

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.

No business rates are payable unless the income is over €100K pa.

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!

Once again, as with furnished lettings above, the landlord is required to undertake the formalities required in relation to a tenant who quits a tenancy.


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