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Why some French cities are increasing taxes for second-home owners

French cities with a shortage of housing are able to increase the residence tax by up to 60 percent on second homes. Marseille is set to become the latest city to implement the measure.

Marseille is the latest city to increase taxes on second home owners.
Marseille is the latest city to increase taxes on second home owners. Photo: GERARD JULIEN / AFP.

The taxe d’habitation (residence tax) is in the process of being abolished for most French residents, with 80 percent of households exempt this year. The exemption only applies to primary residences, however, and many towns have voted to increase the tax applied to second home owners.

Who?

That power is given to towns in zones tendues (troubled zones), urban areas of more than 50,000 inhabitants where housing supply is largely inferior to demand. In those areas, local authorities can choose to increase residence taxes for furnished properties not being used as primary residences. The aim is to encourage second home owners to either sell the property, or rent it out long term.

Local councils can increase the share of the tax which is owed to them by between 5 and 60 percent. Until 2017, they could not exceed 20 percent.

Owners of holiday rentals which earn more than €5,000 per year are not covered by the residence tax, however. If you fall into this category, you will have to pay the cotisation foncière des entreprises (business property tax) instead.

Where?

On Friday, France’s second largest city, Marseille, will vote to increase its taxe d’habitation on second homes from 20 percent to 60 percent, joining a number of other towns in applying the maximum rate, according to La Provence.

Paris, Lyon, Bordeaux, Nice, Biarritz, Arles, and Saint-Jean-de-Luz have had their city councils vote to increase the tax at the maximum 60 percent. 

Nantes was recently added to the list of cities qualifying as zones tendues.

READ ALSO Can second-home owners in France get a carte de séjour?

More than 1,130 towns and villages are covered by the legislation, according to Les Echos, who add that many have not yet taken a decision, or have limited the increase to 20 or 30 percent.

You can check whether your town is in a zone tendue here.

Why?

In a property market where many local residents are being priced out of cities like Paris and Bordeaux, authorities have been trying to tackle the number of holiday lets rented out on sites such as Airbnb, as well as those sitting vacant most of the year.

France has one of the highest numbers of secondary residences in Europe, at 3.2 million, occupying 10 percent of the country’s housing stock according to national statistics agency INSEE. There were 126,000 secondary residences in Paris in 2017, and the phenomenon is even more marked in smaller towns on the south and west coasts.

In this context, increasing the tax burden on second home owners is seen by many local authorities as a win-win – either the owners decide to sell and free up the property for renters or local residents looking to buy, or it means more income for the council.

“We’re expecting this surcharge to mean properties in Marseille which are rarely or not at all used return to the regular rental market,” deputy mayor Joël Canicave said on Tuesday, partly in reference to properties reserved for Airbnb rentals during the summer, as reported by France 3.

READ ALSO: The complete French tax calendar for 2022 – which taxes are due when?

The deputy mayor of Lyon, Audrey Hénocque called the city’s increase from 20 percent to 60 percent in July 2021 a “social justice measure” with the goal of increasing affordable housing. But it will also boost city hall’s coffers at a time when local councils are losing out on funds due to the abolition of the residence tax for most households. With the average second home owner paying €210 more per year, Hénocque estimated it would bring in €3.3 million more annually.

Other cities like Bordeaux, Biarritz, Arles and Saint-Jean-de-Luz saw their city councils vote to increase the tax at the maximum 60 percent this year.

Exceptions

If your commune has voted to increase the residence tax, you could still qualify for an exemption if you fall into one of the following categories:

  • You work close to your second home meaning you are mostly living there instead of in your primary residence
  • Your primary residence is a long-term care facility, meaning your former primary residence is now your second home
  • The property is uninhabitable for a reason outside of your control. For example, if work is needed to make it habitable

You can request an exemption at the local tax office where your second home is located.

The taxe d’habitation isn’t the only tax second home owners have to pay, though. All home owners have to pay the separate taxe foncière property tax.

The residence tax this year is due on November 15th, although if you have chosen to pay online or in monthly installments you have until November 20th.

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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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