What Every Owner Needs to Know
Owning property in France, whether for personal use or investment, comes with financial obligations that are often underestimated. Understanding these taxes is essential to avoid surprises. Here’s an overview of the key taxes you’ll encounter as a property owner in France.
Property Tax (Taxe Foncière)
Property tax is an annual charge for all property owners, covering built properties (houses, apartments) and undeveloped land. The tax is based on the cadastral rental value of your property, determined by tax authorities, and multiplied by a rate set by local councils.
Newly built homes or specific renovations may qualify for exemptions lasting 2 to 5 years. Once the exemption period ends, the full tax is due.
Waste Collection Tax (TEOM)
This tax funds waste collection and disposal in your local area. It’s included in your property tax bill and calculated based on the property’s size and cadastral value. Tax rates vary by location. Before buying a property, always request the latest tax bills. The cost can range from a few hundred euros to tens of thousands for luxury estates.
Housing Tax (Taxe d’Habitation)
This tax applied to both owners and tenants but has been abolished for primary residences. However, it still applies to secondary homes.
The calculation is similar to property tax, so owning a secondary residence could result in a significant annual charge.
Vacant Property Tax (Taxe sur les Logements Vacants)
Properties left empty and unfurnished for over a year in high-demand areas are subject to this tax. Rates can reach up to 34% of the property’s rental value after several years of vacancy.
You won’t be liable for both housing tax and vacant property tax on the same property.
Local Development Taxes (Taxes d’Aménagement)
These taxes apply if you request a building permit or undertake major renovations. They include:
Development Tax: Supports local infrastructure and is based on the area modified or created.
Preventive Archaeology Fee: Covers potential archaeological studies before construction begins.
These costs are often overlooked during the planning phase.
Value Added Tax (VAT) on Property Sales
Property sales between individuals are usually VAT-exempt. However, certain transactions, such as new builds or off-plan purchases, are subject to 20% VAT. Always confirm whether VAT applies before purchasing. Check out our Youtube page in order to find out more about this subject.
Wealth Tax on Real Estate (IFI)
If the net value of your French real estate exceeds €1.3 million, you must pay the Wealth Tax on Real Estate (IFI). This progressive tax ranges from 0.5% to 1.5%, depending on the total value of your property holdings.
Additional Taxes for Rental Properties
Business Property Tax (CFE)
Renting out a property may qualify as a commercial activity, making you liable for this tax. The amount depends on your municipality and the rental value of the property.
Rental Income Tax
Income from rental properties must be declared in France, regardless of your tax residency. Rental income is subject to income tax and social charges (CSG and CRDS).
Final Thoughts
Understanding these taxes ensures you’re prepared for the financial responsibilities of owning property in France. Millions of property owners manage these obligations, so don’t be discouraged.
For more information, feel free to contact us or explore our comprehensive property buying guide.