Crackdown on undeclared second homes in south-west France

Towns in south-west France are set to target owners who fail to correctly declare the status of their property.

Authorities argue that misclassification of second homes as main properties is causing the loss of millions of euros per year. Most of this comes from the loss of revenue from the second-home tax (taxe d’habitation).

A new deal between local authorities in the Basque Country (Pays-Basque) and the national tax authorities will allow communes to directly penalise property owners who fraudulently mislabel their second homes as main properties. 

“Municipalities and urban areas that are already conducting investigations will be able to provide the results of their work to the tax authorities,” said Socialist MP Peio Dufau to France3.

“They will then take up the matter and simply issue fines, because they will practically already have the fraud established.”

Fines will consist of up to three years of retroactive taxe d’habtiation payments, and a targeted tax audit (redressement fiscal) of the property.

Mr Dufau said the agreement should be officially signed in the coming weeks.

Generally, it is the tax authorities themselves who issue penalties for those who incorrectly pay taxes.

Swathe of properties changing status

Between 2020 and 2023, taxe d’habitation was gradually turned into a tax exclusively for second homes, and is now only levied on properties declared as secondary residences

Many owners therefore declared their second homes in the area as main properties to avoid the tax.

Around 5,000 properties in the Pays-Basque are reportedly mislabeled as main homes when they are in fact secondary residences.

While the crackdown applies across the entire Basque Country agglomeration (158 communes with more than 320,000 residents) large towns such as Biarritz are the central target of the new measures.

The number of second homes in Biarritz has decreased 11.5% since 2024, statistics show.

Authorities believe that in many cases this has not been due to a shift in residential habits but owners misleading authorities about the use of properties, with more than 1,000 properties in the city believed to have been fraudulently reclassified as primary residences.

The city has long been classified as a zone tendue due to housing pressure from second homes, and has previously hiked additional rates on the taxe d’habitation. 

Financial issues 

Biarritz suffers twofold from misleading declarations. 

Primarily, it loses out on taxe d’habitation payment from thousands of properties, leading to a funding gap. 

Property taxes including the taxe d’habitation are some of the last remaining locally-sourced revenue streams for municipalities in France, going to fund local services and improvements. 

Around €750,000 is lost per year in taxes due to mislabelled second homes. 

On top of this, the city faces national fines due to the misinformation.

The SRU law passed in 2020 requires towns of a certain size such as Biarritz to have a minimum number of social housing units compared to private main residences. 

If there are too many properties listed as private main homes, this falsely increases the proportional number of social housing units that should be in the city, leading Biarritz to face penalties.

Recently, it has faced fines of €250,000 for failing to reach social housing quotas, fines that local authorities believe are caused by the mislabelling of second homes. 

“At the town level, we have no means of enforcement or direct control,” said Biarritz deputy mayor Manuela Dizier Chanfreau to France3. 

Checking water metres to assess whether these reclassified main homes are genuinely being lived in full-time is “currently under consideration, but it hasn’t been implemented yet,” the deputy mayor added. 

Ensure home is correctly listed 

Property owners can declare the status of their property via the French tax site, through the biens immobiliers section. 

In 2023, all homeowners in France needed to verify the status of their property (rented, lived in, second home, etc) through the new system. 

Since then, owners must notify tax authorities only if the property’s status changes, with a deadline of June 30 on the year following the change.

If they do not, they risk a fine of €150. 

You can use the biens immobiliers section to ensure the information about your home is correct. 

Second home owners should be receiving taxe d’habitation bills for the property annually. 

Very few exemptions exist, and where they do, they are mostly for business owners or those renting in larger cities full-time to work. 

You should contact the tax authorities to confirm your situation, as you may be fined or have to pay backdated payments in the event you have been avoiding the tax (even if this was not your fault). 

However, authorities are more likely to be lenient to those who proactively try to rectify these issues.