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New tax laws create hidden costs for second home owners in France

Owning a second home in France is a common dream for many, but while you might be able to save enough for a deposit, it's important not to forget about those - sometimes significant - hidden costs.

In France there are some extra costs specifically associated with owning a second property – and it's crucial to know about these before you lose all of your hard earned cash to the French taxman. 

The taxe d'habitation (local tax or council tax) is being phased out in France and will be completely abolished by 2021… but this is only the case for principle residences and not second homes. 

The taxe d'habitation can add a lot to your annual outgoings and is calculated according to the rental value of properties in your area which have been mapped out and have tax rates associated with them which have been voted on and approved by local authorities. 

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From taxes to toilets: All you need to know about renovating a house in FrancePhoto londondeposit/Depositphotos

It's a complicated and outdated calculation system – which is one of the reasons it is being scrapped for the majority of people in France – but the reforms have actually increased tax bills for many second home owners.

This is down to the fact that not only did President Emmanuel Macron want to scrap the tax for principal residences, but he also allowed city councils across France to drastically increase their tax on second homes.

These areas are known as zones tendues in French which is simply the names for an area where a tax on empty buildings is enforced. 
 
With the aim of discouraging short-term holiday rentals that are disrupting the housing market and increasing costs for full-time residents in areas that are already short on housing, Macron authorised the move in the national budget in 2017.
 
 
It took immediate effect in Paris and ever since city councils across France have been following in the footsteps of the capital and tightening their grip on second home ownership.
 
And places that are very popular with people looking for second homes, such as Nice, Saint Jean de Luz and Bordeaux were among those that followed suit. 
 
A total of 1,151 French councils, towns and cities with a population of more than 50,000 are eligible to impose the tax hike. Here's a complete list of the French towns and cities considered a zone tendue.  
 
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Photo: AFP
 
This can legally be of up to 60 percent on the basic council tax rate (up from 20 percent previously).
 
When the move was announced back in 2018, French financial daily Les Echos labeled the law as “irresistible” for local councils, alluding to the fact that cash-strapped mayors across France would be willing to take full advantage of this legislation.
 
Macron's move was also considered as his offering an olive branch to appease local officials who were up in arms last year after he announced his plans to scrap council tax for home owner-occupiers, without announcing a plan for how they would make up for the financial shortfall. 
 
The tax hike on second homes is also widely popular among French voters, especially for long-term residents of France's main tourism hotspots, where finding a well-priced home or finding one at all, is becoming increasingly challenging, largely due to the monopoly imposed by the short-term rental market.
 
In the case of Bordeaux, it was the increase of student numbers by 15,000 and the difficulty in finding housing for them that spurred them to adopt the legislation.
 
According to Les Echos, by raising the tax Bordeaux city council aimed “to encourage owners to sell their property/ies, or dissuade them from offering them up for rent on Airbnb-style platforms, in a city that is truly lacking housing”.
 
France's national stats body INSEE reported that there are 3.4 million second homes in France, one in ten of all housing units. Paris has approximately 110,000 second homes. 
 
But there is one bit of good news for people doing a renovation – the taxe d'habitation only needs to be paid on homes that are habitable.
 
The French tax office says that a property is classed as uninhabitable if the total value of works needed on it make up more than 25 percent of the value of the property itself. If this is queried, than you may need to get a builder's estimate to show the financial value of the work that still needs to be done on your dream home before its is ready to move in to.

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MAP: Where in France can you buy property for less than €100k?

While French cities such as Paris are notoriously expensive, there are many areas outside the cities where it is still possible to buy spacious homes for less than €100,000 - particularly if you don't mind a bit of renovation.

MAP: Where in France can you buy property for less than €100k?

We decided to look at where in France you could afford a property on a budget of €100,000, and it turns out there are some bargains to be had.

There are a lot of caveats while searching for property, and many local variables in place, but our search does show some of the areas to concentrate on if you have a limited budget.

We used the Notaires de France immobilier website in August 2022, and we specified that the property should have at least five rooms (including kitchen and bathroom) and a floor space of at least 100 square metres.

We also discounted any property that was for sale under the viager system – a complicated purchase method which allows the resident to release equity on their property gradually, as the buyer puts down a lump sum in advance and then pays what is effectively a rent for the rest of the seller’s lifetime, while allowing them to remain in the property.

READ ALSO Viager: The French property system that can lead to a bargain

For a five-room, 100 square metre property at under €100,000, you won’t find anywhere in the Île-de-France region, where the proximity of Paris pushes up property prices. The city itself is famously expensive, but much of the greater Paris region is within commuting distance, which means pricier property. 

Equally the island of Corsica – where prices are pushed up by its popularity as a tourist destination – showed no properties for sale while the region of Provence-Alpes-Côte d’Azur – which includes the French Riviera – showed only 1 property under €100,000.

The very presence of Bordeaux, meanwhile, takes the entire département of Gironde out of this equation – but that doesn’t mean that the southwest is completely out of the running. A total of 25 properties came up in the Nouvelle Aquitaine region. One property was on the market for a mere €20,000 – but it was, as the Notaires’ brochure noted, in need of “complete renovation”.

Neighbouring Occitanie, meanwhile, showed 12 further properties in the bracket.

By far the most properties on the day of our search – 67 – were to be found in the Grand Est region of eastern France. The eastern part of France overall comes out best for property bargains, with the north-east region of Hauts-de-France showing 38 properties and and Bourgogne-Franche-Comté displaying 25.

Further south, however, the presence of the Alps – another popular tourist destination – pushed up prices in the Auvergne-Rhône-Alpes region which showed just three results.

The below map shows our search results, with darker colours indicating more cheap properties.

Property buying tips 

In order to make a comparison, we focused our search on properties advertised online, but if you have a specific area in mind it's well worth making friends with a few local real estate agents and perhaps also the mayor, since it's common for properties not to be advertised online.

Most of the truly 'bargain' properties are described as being "in need of renovation" - which is real estate speak for a complete wreck.

If you don't mind doing a bit of work you can often pick up property for low prices, but you need to do a clear-eyed assessment of exactly how much work you are willing and able to do, and what the cost is likely to be - there's no point getting a "cheap" house and then spending three times the purchase price on renovations.

READ ALSO 'Double your budget and make friends with the mayor' - tips for French property renovation

That said, there were plenty of properties at or near the €100,000 mark that were perfectly liveable or needed only relatively minor renovations.

You also need to pay attention to the location, as the sub-€100,000 properties are often in remote areas or very small villages with limited access to amenities. While this lifestyle suits many people, bear in mind that owning a car is a requirement and you may end up paying extra for certain services.

Finally remember that government help, in the form of loans and grants, is available for environmentally friendly improvements, such as insulation or glazing.

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