Second Homes and Local Tax Exemption
Tuesday 05 May 2015
Second home owners liable for the taxe d'habitation surcharge can gain exemption if they are unable to let or sell the property, although only in limited circumstances.
As we have previously reported in the Newsletter, owners of furnished second homes in areas of housing shortage in France face an increase of 20% on their taxe d'habitation.
The tax is a discretionary one available to local mayors in affected areas to choose whether or not to introduce it.
The measure concerns 1151 communes in 28 urban agglomerations in France, known as zones tendues*, where a tax on long-standing vacant homes is already in force.
Those who hold a second home for business or professional reasons would be exempt, as would landlords who let out unfurnished property.
However, furnished properties that are only let out on a seasonal basis for holiday lettings are liable for the tax, provided the local council have decided to introduce it.
The only basis on which some owners can escape liability is for reasons beyond their control - une cause étrangère à leur volonté.
The government have recently accepted that, on this basis, furnished second homes placed on the market for rent or sale at the market price and which remain unlet or unsold can obtain exemption from the increase in the tax.
No detailed conditions that would trigger the exemption have been specified. The guidance merely states that it will only be granted on application, when the applicant would be required to demonstrate that they had done all that was possible to let or to sell the property. That leaves the circumstances when relief may be granted very unclear.
Thus, it is not clear just how long a property would need to be on the market for the exemption entitlement to kick in.
The circumstances in which a property being advertised for holiday lets might be able to claim exemption also remain particularly unclear, as, by definition, a holiday letting would not be the principal home of the occupant.
What is certain, however, is that a furnished property let out to a tenant as their principal home would be exempt from the surcharge, as would an unfurnished letting.
The guidance also states that a property that cannot be occupied on a normal basis due to lack of services, or to redevelopment, rehabilitation or demolition may also be granted an exemption. In practice this is not new, for under existing rules a property that is uninhabitable due to building works can be granted an exemption from the taxe d'habitation, albeit only on application.
*Zones Tendues: Ajaccio, Annecy, Arles, Bastia, Bayonne, Beauvais, Bordeaux, Draguignan, Fréjus, Genève – Annemasse, Grenoble, La Rochelle, La Teste-de-Buch – Arcachon, Lille, Lyon, Marseille – Aix-en-Provence, Meaux, Menton – Monaco, Montpellier, Nantes, Nice, Paris, Saint-Nazaire, Sète, Strasbourg, Thonon-les-Bains, Toulon and Toulouse.