What is France’s empty homes tax and why more people will be paying it

More people in France will be liable to pay the annual tax on empty homes in 2023 after the government extended the eligibility criteria. The amount is also set to rise by as much as 46% from last year’s bill.

The tax is part of the state’s aim to reduce the number of empty properties.

Second-home owners are required to pay the taxe d’habitation on their second homes, whether or not they use the property for holidays or rent it out seasonally. The only condition is that the property must be sufficiently furnished to make it livable.

However, if the property is unfurnished and no one lives in it, you normally do not have to pay the ordinary taxe d’habitation tax.

However, you may still have to pay:

• Taxe sur les logements vacants (TLV) if the home is in an area deemed to be under high pressure for housing

• Taxe d’habitation sur les logements vacants (THLV) if it is not in a high-pressure area

Read also: Exemptions and reductions extended for the taxe foncière in France

Taxe sur les logements vacants (TLV)

This tax applies to properties that have:

• Been empty or unoccupied for more than a year on January 1 of a given year (so, January 1, 2023 for bills going out at the end of December 2023)

• If they are located in communes where there is housing pressure, with more demand than supply

Until this year only towns and cities of more than 50,000 residents could be classed as zones tendues (under pressure for housing) for this purpose. However, the definition has been enlarged in this year’s Finance Law (see below).

To be exempt from this tax, owners must prove that the property:

• Has been lived in for more than 90 consecutive days in a calendar year

• Or has been empty for reasons outside of their control (for example, the property has been put up for rent or sale and no tenant or buyer could be found)

Taxe d’habitation sur les logements vacants (THLV)

THLV may be imposed in areas not considered to be zones tendues if the local council votes to levy it.

This means that empty properties, even if they are in non-high-pressure areas, do not necessarily escape taxation.

This tax applies to:

• Empty homes that have been unoccupied for more than two years as of January 1 of the tax year

The exemption criteria are the same as for the TLV.

Read also: All owners of French properties must fill in this new tax-site form

Extension of the zones tendues and the TLV rates

The 2023 Finance Law has added a new category to the list of communes subject to the TLV.

All areas considered to be experiencing property tensions can now charge the tax. This applies even if the commune is not in a major urban centre with a minimum number of residents.

High rental and house prices will be taken into account in deciding whether an area meets the criteria as well as the proportion of second homes in the area.

This means that more homes will fall under the criteria for TLV.

Exceptionally this year, communes will also have until February 28 to decide if they want to impose the THLV, in the case that they are still not considered to fall under the rules of zones tendues. Usually they should decide by October 1 of the previous year.

Note that zones tendues communes also have the right to opt to increase the amount of ordinary taxe d’habitation levied on second homes by from five to 60% (this increase applies to the commune’s part of the taxe; there may also be a part of the bill that goes to an intercommunal body). Again, authorities have until February 28 this year to opt for this.

In 2022, 255 communes levied this surcharge. More than half of them were located in the regions of Provence-Alpes-Côte d'Azur and Île-de-France. Of these, 73 charged the maximum rate of 60%.

The number of towns that charge the tax is therefore set to increase in 2023.

Increase in the TLV rate

The TLV is calculated based on a theoretical rental value called the valeur locative cadastrale (also used for other local property taxes).

In 2023, this amount has been revalued according to an annual formula and has risen 7% due to inflation and consumer price rises.

The TLV bill is worked out by applying a percentage rate to the VLC and the rates have been increased as of this year by the 2023 Finance Law:

• In the first year unoccupied: From 12.5% to 17%

• From the second year: From 25-34%

This could mean very significant rises for some people.

For example, an owner who last year was taxed at a rate of 25% on a VLC of €3,000, would be taxed on the basis of €3,210 this year and at 34%.

The combined effect of these rises would mean a bill of €1,092 payable in December 2023 compared to €750 in December 2022, or an increase of some 46% in one year.

Those liable to pay the taxe d’habitation on second homes, and its possible surcharge, will also see their bill rise by at least 7.1 % in 2023, as these taxes are also based on the VLC.

Reportedly some second-home owners have, in the past, preferred to declare their homes as being empty, so as to pay the tax on vacant homes rather than taxe d’habitation, with its high surcharge (in certain areas). The hike in the TLV is now expected to put people off doing this.

Homeowners in France no longer have to pay the taxe d’habitation on their main property. It is only now due for second-home owners.

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