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Second home or main address? French property tax rules explained

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Second home or main address? French property tax rules explained
The picturesque village of Estaing in Languedoc - fancy buying a place here? Photo: AFP
15:19 CEST+02:00
Everyone dreams of escaping the rat race, to the sea, to the mountains, to the rolling fields of sunflowers ... But if you manage to make this escape a reality by buying a second home in France, make sure you know the potential tax repercussions.

First things first, how long do you have to live in France to qualify as a tax resident?

You will be considered an official resident in France if you live in France for at least six months, or 183 days, of the year. This rule does not require that you live at a permanent address in France, but that you are merely on French soil for six months of the year.

A secondary residence is a place that you occupy for less than four months per year.

If you want to become a full time resident you will of course also have to fulfill residency criteria related to your home country.

If I live outside of France most of the time, do I still pay tax in France for my holiday home?

Nice try. Yes, of course you do. If you own a property in France, you must pay the taxe foncière, even if you only spend one weekend a year in your apartment in Cannes. The taxe foncière applies to anyone who owns any building or land in France.

This is separate to the taxe d'habitation, which is an annual tax paid by whoever occupies a property on January 1st (whether they are an owner or a tenant).

It doesn't matter how long you spend at a second home, you are still liable for the taxe d'habitation, in fact the tax is currently in the process of being phased out - for everyone apart from second home owners.

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How much tax will I pay for my little cottage in the sun?

Quite a lot, is the depressing answer. There are all kinds of tax breaks and reductions available for property in France that sadly do not apply to your maison secondaire (second home).

The property owner's tax (taxe fonciere) is calculated by the annual rental value of your property. Crucially, you don't get to decide this, but instead the local authority will decide.

You take this total figure for the year and, somewhat arbitrarily, you divide it in two, then multiply it by the tax level set by the local authority of the property's address.

The location of your home will make all the difference for this. If you have bought in Cote d'Azur, expect to pay considerably more than if your home away from home is in Limousin.

And the even worse news is that many areas have seen sharp increases in property tax recently, as the outdated tax formulas - some of which date back to the 1970s - are being recalculated.

If you live in a zone tendu - an area where there is a housing shortage - you may also be liable for a higher rate of taxe d'habitation. You can find out here if your area is covered by this.

How will I know when to pay?

You should get a tax demand through the post, but if not it is up to you to check that you are correctly registered with the French tax authorities.

The taxe foncière demands generally arrive over the summer and the taxe d'habitation bill arrives in the autumn. Also included in the taxe foncière bill is a charge from your local commune for rubbish collection, which is a flat rate regardless of how much time you spend there.

What happens if I rent it out when I'm not there?

This is relatively straightforward. The first important thing to note is that each short term lease cannot exceed 90 days to the same tenant in either your main residence or your holiday home.

Your main residence cannot be rented out for more than 120 days.

Second homes may be rented without any limitation of the number of days in the year. But you do obviously have to pay tax on the rental income. If you have a full time tenant they will pay the taxe d'habitation but you will still have to pay the taxe foncière.

And, if it is not your main residence, you must declare the lodging to your municipal government using this form.

Any nasty twists in the tax tail?

It's French bureaucracy, of course there are.

People with a secondary residence will not get any deductions in the calculation of their income tax or any inheritance tax benefits. You will not be also granted any tax credits if you carry out any DIY work in your holiday accommodation.

And, when you are actually buying it, this type of residence does not benefit from any assistance (zero rate loans etc).

Is it all doom and gloom?

Not quite. The small glimmer of light is that you will only have to pay one television licence, even if you have tellies at both addresses. So that's a saving of about €120. 

And of course you will have a second home in France to enjoy.

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