Reader question: We are UK residents intending to purchase a holiday home in France. Am I right in thinking legislation in France means the property taxes we face as non-residents are stiffer than before? Are they at the same level as for French residents who also own a holiday home in France?
Properties in France are subject to both land tax (taxe foncière) for owners and residence tax (taxe d’habitation) for occupants, although the latter is gradually being phased out for main homes (see below for more on this).
All second-home owners, whether French residents or not, must also pay these taxes, and the rate depends on the type and location of the property rather than the nationality of the owner.
Taxe foncière on second homes
People are required to pay the taxe foncière ownership tax, unless exempt, if they owned a French property on January 1 of the year in question.
The revenue goes to the local town hall (mairie) and in some areas a part goes to an intercommunal body, to fund local schools, sports facilities, roadworks etc. A part also used to go to departmental councils, but that is not the case since 2021.
Taxe foncière is based on a theoretical annual rental value calculated by the tax office, called the valeur locative cadastrale (VLC).
This figure, which will probably not bear much resemblance to the actual market value you would obtain if you rented it out, takes into account various factors such as location, quality of construction, local amenities and comfort.
The amount payable therefore varies depending on the value and location of your house, and the rate decided by local authorities.
Until 2020, homes with a particularly high value and secondary residences were subject to an additional payment, known as the prélèvements pour base élevée et sur les maisons secondaires, but this has now been abolished.
Taxe d’habitation on second homes
The French occupants’ tax (taxe d’habitation) is gradually being phased out for main residences, but this does not apply to second homes, whether their owners are French or international.
By 2023 no one will have to pay taxe d’habitation on their principal residence, but secondary residences will be billed according to the property that they owned, rented or occupied on January 1 of the year in question. Therefore, even if you were not staying in the property on this date, you will still be charged as long as it is fit for habitation.
You will only have to pay if your income exceeds certain thresholds calculated on the basis of the number of people (described as ‘units’) who occupy it. Two adults would, for example, count as two units, as would one adult and two children (counted as one full and two half units).
The rate of taxe d’habitation is decided by the local council but is generally based on the amount that the property could in theory be rented out for its valeur locative cadastrale, and is recalculated each year.
Taxe d’habitation rates are generally higher in towns than in the countryside, but vary greatly between areas.
You could under certain conditions be exempted from taxe d’habitation payments if you rent out your second home as a furnished letting for most of the year, but then you would probably be subject to business rates and income tax.
Taxe d’habitation surcharge in certain areas
Since 2017, municipal councils in towns of more than 50,000 inhabitants where there is a severe housing shortage have also been allowed to implement a taxe d’habitation surcharge of 5-60% for second-home owners.
Most councils only apply a surcharge of around 20%, but several cities – including Paris, Lyon, Montpellier, Nice and Bordeaux – have decided to impose the maximum 60% in a bid to ease pressure on local housing supply.
So, if you buy a second home in a city or city region where taxe d’habitation surcharges apply, you may face higher rates than would have been applied before 2017.
There are, however, certain exceptions for people who own a second home for work purposes.
When are taxe d’habitation and taxe foncière bills sent out?
Taxe foncière bills are sent out in September and taxe d’habitation bills in October, with details of the payment deadlines, which may be slightly different for second-home owners.
You can also choose to pay on a monthly basis, or on an annual basis by direct debit.
You can view and manage your bills online via the impots.gouv.fr portal if you select an ‘online only’ payment system.
Emails should normally be sent out to homeowners to remind them to pay before the deadline arrives.
Other things to consider
People buying a second home in France should also be aware of the costs of buying and selling a house in France, which includes a higher rate of capital gains tax than is applied to EU/EEA residents.
The UK’s exit from the EU also means, of course, that second-home owners will only be able to stay at their property for 90 days in every 180, unless they obtain a visa.