1. Property tax increases ‘up to three times that of inflation over the last decade’
A number of cities are facing backlash for taxe foncière increases, which have seen a yearly rise of almost 60% in some communes.
The property tax, paid in the autumn, went up by 7.1% across the board in 2023, but communes can levy an additional increase on homeowners on top of this, with many cities choosing to do so.
Two weeks ago, the Union nationale des propriétaires immobiliers (UNPI) announced its intention to sue Lyon’s city council over the additional 9% increase placed on property owners in the area (bringing the overall increase to just over 16%) and in March Grenoble announced an additional 18% levy, bringing the total property tax increase to 25% compared to the previous year.
Other major cities such as Metz (14.3%) and Bordeaux (4.5%) announced additional increases, and in Paris, an additional increase of 51.9% will be levied.
A number of communes have defended the rises as inevitable, citing lost revenue from the abolishment of taxe d’habitation from all but second homes and a drop in state subsidies leaving a financial black hole.
Despite promises by the government to make up the deficit from the loss of taxe d’habitation for all communes, many mayors feel help has not been adequate and have been left with no choice but to raise the property tax.
Raising the property tax was the only way to “vote for a balanced budget," said the mayor of Metz François Grosdidier, of the right-wing Les Républicains party.
“A municipality cannot pay for its operating expenses by borrowing… so we were forced to make the increase," he added, pointing to a €14 million drop in annual revenue.
The alternative would be “closing nurseries, libraries, swimming pools [and other public services],” the mayor concluded.
For property owners facing increased charges, this means relatively little and they argue that once again the burden is falling on their shoulders.
“If we look at the increase in property tax over 10 years, it is three times [higher than] inflation and three times the evolution of rents,” said Christophe Demerson, president of the UNPI.
“The middle classes will no longer be able to stay in their homes, especially the elderly. And for landlords, it's even worse because the economic model is exploding with negative returns in more than half of the country. Landlords… have a gun to their heads," he added.
2. French villa loved by Grace Kelly up for sale
A French villa once frequently visited by American actress Grace Kelly is on the market for €11.5 million.
The property, situated in the village of Gilette around 35km north of Nice, is 540m² and boasts seven bedrooms, as well as a swimming pool, tennis courts, a gym and a helipad.
The Les Moulins du Villars estate dates back to the 14th century but the property was completely rebuilt in 2012.
Grace Kelly became Princess of Monaco in 1956 after marrying Prince Rainier III.
She often spent time in the French countryside surrounding Monaco and was a fan of the local culture and produce of the region.
Ms Kelly first visited the property in the 1980s and frequently used it to host events presenting cheese and olive oil grown in the village.
After befriending the property owners, she regularly visited them and two statues she offered as gifts are still present in the main house.
Aside from the mod cons and artwork, it also has its own spring, used to irrigate the garden and which the locals believe has healing properties.
The property is being sold via Sotheby’s Côte d’Azur, and you can find the property listing here.
You can also watch a video presenting the property below.
3. Airbnb contests French island’s claim for €30 million
The French island Île d'Oléron has claimed Airbnb owes it nearly €30 million over failures to pay tourist tax in 2020 and 2021.
That is despite the short-term letting giant paying €405,000 to settle for both years in a previous court case.
But the communes of the island are now claiming additional money as a fine for not paying initially.
Officials arrived at the €29.7 million figure by using the maximum fine allowed by local authorities for not paying the tourist tax (€2,500) and applying that to nearly 12,000 Airbnb rentals over the two-year period.
Airbnb’s lawyer Thomas Rouhette said the island’s claim was a “reprisal” following the court case and “75 times the amount of tax due”.
He said Airbnb’s failure to pay was linked to the law changing in 2020, prior to the declaration, leading to a problem of interpretation. The following year he said a computer error had caused issues.
Jonathan Bellaïche, a lawyer representing the island, said the law allowed for sanctions to be imposed.
"Today, it is Oléron that dares to stand up to Airbnb but other communes are waiting to see what will happen… there is a lot at stake,” said Adèle Azzi, another lawyer representing the communes on the island.
"Airbnb represents 90% of the short-term rental market and France is its second-largest market after the United States. It has a turnover of nearly eight billion. This subject has not been treated seriously by Airbnb," she added.
The court case happened in La Rochelle on May 23. A decision on Oléron’s claim is expected on June 16.
Read more: Tax Airbnb rentals more, demand French MPs
4. Balconies and pools still boost sale value despite stuttering property prices
Features such as swimming pools, balconies, and gardens can increase the value of a property, even in the context of stagnating or falling property prices in some parts of France, claims a new study by Meilleurs Agents.
The study assessed the price of property in the 50 largest urban areas in France, to see how much property prices were affected by their inclusion or omission.
Properties were comparable in their characteristics aside from whether the features in question were present or not.
Flats which had a balcony sold for 9.7% more on average than those without, the report said.
This is due to the long-term ‘Covid effect’, with property owners wanting more access to outdoor space, including in major cities, even after the effects of the crisis and subsequent lockdowns have all but vanished.
Properties with swimming pools saw a 7.6% increase in price compared to those without, and gardens saw property prices rise by 4.2% on average.
“Even if the post-Covid boom in prices for properties with balconies or terraces recently reached its glass ceiling last February, this feature remains an asset for resale,” say the authors of the study.
The study also showed how impactful the presence of a balcony was on property prices in the ten largest cities in France. The largest increases were - perhaps unsurprisingly - in the south of France.
- Paris: 8.2%
- Marseille: 15.4%
- Lyon: 6.7%
- Toulouse: 7.7%
- Nice: 10%
- Nantes: 6.5%
- Strasbourg: 7.2%
- Montpellier: 9.8%
- Bordeaux: 7.2%
- Lille: 6.3%
- Rennes: 4.6%
5. Middle-class tax cuts cast doubt on inheritance law changes
Once a key re-election promise of French president Emmanuel Macron changes to inheritance law look to have been replaced with a range of tax cuts for the middle classes.
During his 2022 re-election campaign, Macron pledged there would be “no inheritance tax up to €150,000 per child” (as opposed to a €100,000 allowance at present) and said he wanted to adapt the inheritance tax regime to the reality of today’s society, lessening the tax due on amounts given to indirect descendants such as stepchildren.
People would therefore be able to bequeath up to €100,000 to brothers, sisters, nephews, nieces and step-children without any tax liability, he stated before the presidential election.
These changes however have taken a back seat, with the government preferring to focus on tax cuts for people earning between €1,500 and €2,500 per month.
Mr Macron said around €2 billion will be put towards these tax breaks, but only “when the budget allows it,” in an interview with TF1 earlier this month.
The change in strategy seems a foregone conclusion – last month, an unnamed government minister told Les Echos: “This gesture for the middle classes will be made instead of the measure on inheritance tax.”
Proponents say the tax breaks will have a more direct impact on people living and working in France – a recent study by the Conseil d'analyse économique said that out of 800,000 people assessed, only around 50% inherited €70,000 or more in their lifetime.
“Lowering inheritance tax is actually aimed at the upper middle classes, or upper, upper middle," said François Ecalle, a former magistrate at the Court of Auditions.
The current law means children can inherit up to €100,000 in assets from each parent before paying tax (so €200,000 cumulatively), but the allowances are lower for other relatives. In the case of nephews and nieces, for example, the tax-free amount is only €7,967 before a 55% tax is levied on the inheritance, and where there is no family relationship there is 60% tax after an allowance of just €1,594.
Some commentators think Mr Macron may choose to at least carry out part of his pledge, and increase the tax-free allowances available for relatives other than children, and for unrelated people, but not increase the allowance for children as well.
If so, it would be good news for many Connexion readers wanting to leave bequests, for example to stepchildren or friends, and faced with half of the gift being lost in tax.