New tax on second homes proposed

SECOND homes in “high pressure” areas – including the Riviera and Paris – could be slapped with an extra 20% on top of their taxe d’habitation from next year.

As part of debate on the third “corrective finance law” for 2012, the government wants to create a new levy referred to in the French press as a “super taxe d’habitation”.

This would be on “under-occupied homes”, a roundabout way of saying second or holiday homes.

According to the president of the National Assembly’s finance commission, Gilles Carrez, it would only apply in zones tendues (high-pressure areas), which he said includes places like the Riviera and the Swiss border and large cities like Paris, Toulouse and Lyon.

This comes as the government has announced it also wants to increase tax on large capital gains made on second homes.

The new tax would be equal to 5% of the valeur locative cadastrale, a theoretical rental value used in working out property tax, or roughly 20% of the taxe d’habitation bill.

The government says the extra tax represents “social justice” because only “the most well-off” will pay it.

However commentators pointed out it may have a negative effect on the housing market, after a year which already saw sales drop 20% in the non-new-build sector.

Foreign buyers, in particular, are said to be increasingly wary of investing in French property.

The president of large estate agents’ group Fnaim, François Buet, told Le Figaro it was likely that people would put off selling. Homeowners were tired of being taken for “cash cows”, he said.

A plan by the previous Sarkozy government to levy a tax equivalent to an extra taxe foncière on non-residents’ second homes was dropped last year after anger from both French expats and non-French people and suggestions that it might infringe EU rules.