Why do only second home owners pay taxe d’habitation in France?

The tax has been abolished for all main residences but still applies for second homes

There are no plans at present to remove taxe d’habitation property tax from second homes
Published Last updated

Reader Question: Why is it only second-home owners who are required to pay taxe d’habitation in France? We end up paying more taxes for services we use less

Until a few years ago, all homeowners paid taxe d’habitation (a tax payable by whoever has use of a property on January 1) on their properties.

Beginning in 2018 and applicable initially to low-income homeowners, the tax was gradually reduced, being phased out for all income-levels for main residences by 2023.

This was covered in the 2018 Finance Act which initiated the cutting of the taxe d’habitation.

Lowering then removing the tax for low-income homeowners was a pledge of President Emmanuel Macron’s first presidential campaign.

It was promoted both as an alleviation of tax burdens on poorer homeowners, but also as a way to simplify France’s complex tax bureaucracy.

Tax had been criticised for unfairness

A number of criticisms had been levied against the taxe d’habitation, largely centred on the significant variations between communes.

As with other property taxes, the taxe d’habitation was collected directly by local authorities, which then used the income to fund local services.

These authorities could set their own rate for the taxes hence the variation in amount across the country, and even from one neighbouring commune to another.

Data from 2012’s taxe d’habitation payments showed a difference of over €1,000 between the highest and lowest average tax bills.

The highest that year was in Sucy-en-Brie, a town in the Val-de-Marne department close to Paris – the average taxe d’habtiation there was €1,598.

In comparison, the lowest average was just €499, in Villefontaine, Isère.

A ruling by France’s Constitutional Council called the tax too unequal, one reason moves were made to abolish it for all main residences.

Read more: Taxe foncière, taxe d’habitation: how are these worked out in France?

Why did it remain for second-home owners?

Even in the earliest stages of the reforms, the tax was never intended to be abolished for second homes – a 2018 Le Figaro article stated that one of the negative effects of removing the tax for main homeowners would be “to squeeze even more tax out of secondary residences.”

As mentioned, the taxe d’habitation is a local tax, and is used to directly fund local services.

The government has given grants to replace local communes’ lost income from taxe d’habitation on main homes although some communes say the grants they are receiving are insufficient to cover all their

especially when faced with issues such as rising energy or building maintenance costs.

Councils also dislike fixed grants as these cannot be varied by voting for changes to their local tax rates.

This is one reason why taxe foncière bills (another form of property tax, paid by all homeowners) have increased this year in some communes.

Although the government has not addressed the reason for the tax remaining for second-home owners, some speculate it may be positive in deterring second homes in areas with housing shortages.

It may also be aimed at placating local councils, many of whom would have raised further objections if the tax was also abolished on all second homes.

It comes also at a time when slowing house sales in France is reducing communes’ income from their part of the ‘notaires’ fees’.

This year has in fact seen more than 2,200 additional communes across France given permission to apply a further surcharge on taxe d’habitation on top of the normal tax, in areas designated as zones tendues (subject to a shortage of housing).

Previously this applied to 1,100 communes in built-up areas with a population of over 50,000 however it can now be applied to any commune suffering from “marked imbalance between housing offer and demand” (ie. where a lack of housing is pushing up prices).

The fact the communes are allowed to levy such a surcharge does not mean that they will. Nonetheless, Le Figaro quoted an economist and think-tank head, Olivier Babeau, as calling the policy “a fiscal absurdity”.

He said: “Logically the taxe d’habitation corresponded to the cost of local services linked to the presence of people living in the area. Now it is paid – and even specially inflated – for people who do not live in the area.”

The government said the aim was to “give more tools to local authorities in their housing policies”.

18% of properties are second homes or vacant

Property shortages are an increasing issue in France and second-home ownership is often accused of contributing to this – as much as 10% of France’s overall housing stock is classed as a second home, while another 8% is estimated to be vacant (unfurnished and unused).

Keeping taxe d'habitation for second homes could therefore be seen as a move to try to limit the number of second homes in the hope that the properties revert to being main residences, bringing more full-time residents and commerce to rural communities.

Housing Minister Patrick Vergriete has stated he wishes to dissuade owners from using a second, or vacant, home for short-term holiday lets, and to encourage them rather to rent it out long-term as someone’s principal home in which case no taxe d’habitation will be payable.

With the major expansion of zones tendues where additional surcharges on the tax can apply, it does not appear that the taxe d’habitation will be removed for second homes anytime soon.

Related articles:

Taxe foncière explainer: Who pays and the exemptions

Impôt, redevance, taxe: understand the subtle differences in French