Taxes pay for local services, including rubbish collection, street lighting and cleaning, local schools and other community services, and include a contribution to departmental and regional expenses. You may be billed separately for rubbish collection.
Both residential and property taxes are payable whether the property is a main or a second home and whether the owner is a French or a foreign resident. Both taxes are calculated according to a property’s notional ‘cadastral’ rental value (valeur locative cadastrale), which is reviewed every six years. If you think a valuation is too high, you can contest it.
Property and residential taxes vary from area to area and are generally higher in cities and towns than in rural areas and small villages, where few community services are provided. They also vary with the type and size of property and will be significantly higher for a luxury villa than for a small apartment.
TIP: If you’re renting a property, check whether you’re required to pay part of the taxe foncière as well as the taxe d’habitation.
Note that there’s no reduction in either tax for a second home (résidence secondaire); in fact, your taxe d’habitation is likely to be higher, as there’s a reduction for principal residences (maison principale).
Forms for the assessment of both residential and property tax are sent out by local councils and must be completed and returned to the regional tax office (Centre des Impôts) by a specified date, e.g. 15th November or 15th December for residential tax. They will calculate the tax due and send you a bill. You may be given up to two months to pay and a 10 per cent penalty is levied for late payment. It’s possible to pay residential tax monthly (in ten equal instalments from January to October) by direct debit from a French bank account, which helps to soften the blow.
Property Tax
Property tax (taxe foncière) is paid by owners of property in France and is similar to the property tax (or rates) levied in most countries. It’s payable even if a property isn’t inhabited, provided it’s furnished and habitable. Property tax is levied on all ‘shelters’ for people or goods, including warehouses and house boats (fixed mooring), as well as on certain land. The tax is split into two amounts: one for the building (taxe foncière bâtie) and a smaller one for the land (taxe foncière non bâtie). Tax is payable on land whether or not it’s built on. Property tax isn’t applicable to buildings and land used exclusively for agricultural or religious purposes, nor to government and public buildings.
The amount of property tax payable varies by up to 500 per cent with the region, and even between towns or villages within the same region, and may be as little as €300 or as much as €1,500 per year, although there are plans to make the application of the tax ‘fairer’. Strangely, the Paris area has some of the country’s lowest rates.
Note that many village properties are to be connected to mains drainage in 2007 and owners will be charged a connection fee, which will be added to the taxe foncière; you should therefore check whether this will affect the property you plan to buy and, if so, what will be the cost.
Note also that, if you move permanently to France, you should notify the local Service du Cadastre (part of the Tax Office) and the local Trésorerie; otherwise, you may find that your first property tax bill is sent to your previous address (even if this is abroad) and, when you fail to pay (because you haven’t received it), you’re charged for late payment!
Exemptions
New and restored buildings used as main or second homes are exempt from property tax for two years from 1st January following the completion date (new houses and apartments financed by certain types of government loan or purchased by an association for letting to people on low incomes may be exempt for 10 or 15 years). An application for a temporary exemption from property tax must be made to your local property tax office (Centre des Impôts Fonciers) or Bureau du Cadastre before 31st December for exemption the following year. Applications must be made within 90 days of the completion of building work.
Certain people (e.g. those aged over 75 and those receiving a disability pension below a certain level) are exempt from property tax, and others (e.g. those over 65 on low incomes) may qualify for a discount (allégement) of around €100.
You may claim a reduction in your taxe foncière if you work from home.
If you sell a property part of the way through the year, the purchaser isn’t legally required to reimburse you for a proportion of the property tax due (or paid) for that year. However, it’s customary for property tax to be apportioned by the notary between the seller and buyer from the date of the sale (a clause to that effect should be included in the promesse de vente). Therefore, if you purchase a property in July, you will normally be asked ‘reimburse’ the vendor for half the annual property tax. Because you’re not obliged to do so, you can negotiate the amount (or the purchase price of the property), although you may not make yourself popular with the vendor!
Residential Tax
Residential tax (taxe d’habitation) is payable by the occupier of any habitable – i.e. furnished – property on 1st January, whether as an owner, tenant (subject to the letting agreement) or rent-free. If you own a property that isn’t let but are absent from it on 1st January, you’re still liable to pay the residential tax.
Even if you vacate or sell a property on 2nd January, you must pay residential tax for the whole year and have no right to reclaim part of it from a new owner.
Residential tax is payable on residential properties (used as main or second homes), outbuildings (e.g. accommodation for servants, garages) located less than a kilometre from a residential property, and on business premises that are an indistinguishable part of a residential property. It’s calculated on the living area of a property, including outbuildings, garages and amenities, and takes into account factors such as the quality of construction, location, renovations, services (e.g. mains water, electricity and gas) and amenities such as central heating, swimming pool, covered terrace and garage. Properties are placed in eight categories ranging from ‘very poor’ to ‘luxurious’. Changes made to a building, such as improvements or enlargements, must be notified to the land registry within 90 days.
Residential tax is levied by the town where the property is located and varies by as much as 400 per cent from town to town. As with property tax (see above), the Paris area has some of the country’s lowest rates. Generally, you should expect to pay around half the amount paid in taxe foncière. Residential tax is usually payable in autumn of the year to which it applies.
Exemptions
Premises used exclusively for business, farming and student lodging are exempt from residential tax. Residential tax isn’t paid by residents whose income is below a certain level (e.g. €16,290 for a single person), nor by those over 60 whose income in the preceding year was below €10,993 (plus around €2,000 for each dependant).
Professional Tax
Professional tax (taxe professionelle) is payable on business premises and is levied at between around 15 and 20 per cent (the exact percentage varies with the commune) of a ‘base’, which is currently 8 per cent of your annual income including VAT. For example, if you earn e30,000 per year, your tax base will be e2,400; if professional tax is levied at 20 per cent in your commune, you will pay e480 per year. If you work from home, you’re liable for professional tax as well as residential and property taxes, although you can claim a reduction on your property tax according to the proportion of your home that’s used for business purposes.
Other Taxes
In some areas – especially popular tourist resorts, where the local authorities must spend more than usual on amenities and the upkeep of towns – a regional or sundry tax (taxe assimilée) is levied. ‘Buildings tax’ (taxe sur les immeubles) is levied at 3 per cent on property owned by certain businesses.
This article is an extract from Buying a home in France. Click here to get a copy now.