Second-home owners face 20% tax rise

OWNERS of second homes could see their taxe d'habitation rise by 20% under measures being considered as part of the supplementary budget for 2014 that is being presented next week.

The move would hit owners – including foreigners - of second homes in around 30 zone tendue areas where housing is in short supply, including Paris, the Ile-de-France, Atlantic and Mediterranean coasts as well as hard-pressed towns in the south-west and the Alps.

It could bring in €150million to the communes that apply it as the 20% increase in taxe d'habitation will be decided by the local council.

However, there will be certain exceptions for people who need the second home for professional reasons or those who own a property but are living in a retirement home.

The plan was revealed in financial newspaper Les Echos which said it was thought that it would only apply to unoccupied homes, so owners who have let out the property would be unaffected.

This is the second time the government has proposed such a tax after a ‘taxe week-end’ was proposed at the end of 2012 but abandoned.

Its aim is two-fold: to free up unoccupied property in areas where homes are in short supply and to put extra cash into the budgets of communes which have seen state funding reduced.

In Paris, where demand for property is sky-high it is estimated that one flat in six is a secondary residence – a total of more than 170,000 properties – and the numbers are growing; up to 40% of properties in some arrondissements are holiday homes.

However, Les Echos added that the average taxe d'habitation paid in Paris was €464 so an extra 20% cost of just €90 would not have much effect in freeing properties for rental.
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