The ever-growing hidden cost that French property buyers need to know about

The ever-growing hidden cost that French property buyers need to know about
Paris has the steepest property prices in France. Photo: AFP
France’s housing tax has skyrocketed over the past decade, increasing by more than 30 percent between 2009 and 2019 new data shows.

While buying property in France – especially rural France – can be comparatively inexpensive, there are some hidden costs that homeowners need to be aware of.

And one of these is the property owners' tax – known as taxe foncière – which has increased by 31.4 percent, according to numbers revealed by French National Union for Real Estate Owners (Union Nationale des Propriétaires Immobiliers) in French daily Le Parisien.

 

 

The biggest spike happened the first half of the decade and the last five year’s increase was less significant, of 12.1 percent in total. 

“That’s still huge,” Pierre Hautus, Director of UNPI told Le Parisien, adding that the tax hike was six times bigger than the rent increase over the same period of time. 

Who is affected?

Those who will have felt the impacts of the tax increase on their wallets are those who own a property in France and therefore are subject to the annual taxe foncière.

Whereas the French government is in the process of phasing out the taxe d’habitation – the tax paid by those living in the property – homeowners still have to pay the taxe foncière.

READ ALSO Taxe foncière: What exactly is the French property tax and do I have to pay it?

What about second home owners?

Second home owners might have felt the consequences of the tax hike even more than first home owners, as several French cities also charge a surtax for second homes.

And the surtax might be a concern for more and more owners in the future, as new cities implement it every year, according to UNPI.  

The union said it was currently investigating the possibility of second home owners being exempt from paying the taxe foncière if they had not haven’t been able to go there because of Covid-19 restrictions, but at present it is still due.

READ ALSO How has Covid-19 impacted house prices in France?

Why the increase?

One of the reasons is that abolishing the taxe d'habitation has led to some local authorities raising the taxe foncière in order to make up for their loss of income.

According to the UNPI, this could mean that the taxe foncière will continue to increase in the future as the government works its way to zero taxe d’habitation by 2023.

Another reason is that the property tax each year is revalued based on rental prices. Because rental prices have gone up the past 10 years, so has the property tax.

Looking at the broader trend over the past decade, the tax rate grew steadily from 2011 to 2015, before spiking by over 5 percent in one year in 2016.

Since 2017, the rate has been decreasing slightly, and in 2020, “things calmed down because of the municipal elections,” according to UNPI.

No French towns or cities increased their property tax in 2020, according to UNPI.

Is it the same across France?

Not all cities apply the same rate to calculate the taxe foncière.

While most areas in France saw their taxes increase last year, some départements saw a drop, according to UNPI, which mentioned Yvelines (in the greater Paris region), Deux-Sèvres (centre-east in the Nouvelle-Aquitaine region) and Alpes-Maritimes (which is home to Nice).

READ ALSO Property prices: The cheapest areas of France to move to

According to the French Finance and Strategy Cabinet, which recently published a report detailing the development of the taxe fonciere rate, owners in some départements (5 percent of the total) saw their tax rate decrease in 2020.

A majority of French départements have kept their tax rate stable since 2011, according to the report, with only 8 percent of them increasing the rate between 2018 and 2020.

However, keeping the rate stable does not imply that the tax itself remains the same, it simply means that the tax grows or decreases with the same pace from one year to the next.

Did you remember to pay your tax this year?

Property owners have until October 20th at midnight to pay the taxe foncière online.

READ ALSO French tax calendar for 2020

 

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