Reader question: Who has to pay France’s 'vacant property' tax?

Property taxes in France generally fall into two categories - taxe foncière and taxe d'habitation.

Taxe foncière is simple - it is paid by the property owner and almost everyone pays it.

Taxe d'habitation is more complicated - its paid by the householder (so if you own your own home you would traditionally pay both taxes) but is in the process of being phased out for all but high earners and second homes.

If you own property in France that is a second home (whether your main residence is in France or another country) - you will usually still have to pay taxe d'habitation, and if you live in an area with a housing shortage you may have to pay at a higher rate.

But there are also 'vacant property taxes' known as taxe sur les logements vacants (TLV) and the taxe d’habitation sur les logements vacants (THLV).

So who has to pay these?

These are levied on homes that are unoccupied and unfurnished.

So if you weren't able to visit your second home for a long time - for example during lockdowns - it doesn't automatically become a 'vacant' home - the tax only applies to properties that are both empty and unfurnished.

So for example if you have an unfurnished rental property that has been standing empty for a long time then it might be liable for these taxes, likewise property that you have inherited but never lived in.

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Crucially, the vacant property taxes are paid instead of taxe d'habitation - so if you are paying taxe d'habitation, then you won't have to pay the vacant homes tax as well.

They were introduced in an effort to reduce the number of properties lying vacant, and have been increased this year to prevent second homeowners declaring their properties vacant in a bid to avoid paying taxe d’habitation. 

The number of towns that can enforce the vacant homes taxes has risen, while updated tax rules also mean bills are set to increase significantly.

If you have bought a property as a renovation project, you have the option to declare it inhabitable (uninhabitable) which can see your two property taxes reduced or excused altogether for a period of up to two years. This would normally apply in cases of very derelict properties, for example where there is no water or electricity, no functioning bathroom or a roof with holes in it. 

The easiest way to do this is to visit your local tax office to make the declaration, and find out what rules are in place in your area.

What is the difference between the two vacant home taxes?

The two vacant property taxes are; taxe sur les logements vacants (TLV), and the taxe d’habitation sur les logements vacants (THLV). Bills are sent out in December to affected property owners.

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The former is payable on empty homes in areas where demand for property exceeds supply. The latter is payable on empty homes in areas not in a high-need area.

Until 2023, only towns and cities with populations of more than 50,000 could impose TLV charges. The new Finance Law, however, extended the eligibility to all areas considered to be experiencing a housing shortage, regardless of size.

TLV applies on: 

• Properties that have been empty or unoccupied for more than a year, counted from January 1st of the applicable tax year
• Properties in communes where demand for housing exceeds supply.

Be aware, also, that local authorities in areas where property is in high demand also have the right to increase their portion of the ordinary taxe d’habitation on second homes by between five percent and 60 percent.

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TLHV applies on:

• Empty homes in communes where demand for housing does not exceed supply that have been unoccupied for more than two years, as of January 1 of a given year.

There are exemptions from payment, which apply if:

• The property has been lived in for more than 90 consecutive days in a calendar year, or;
• It has been empty for reasons outside of their control - such as if it has been up for rent or sale and no tenant or buyer has been found.

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How is the tax calculated?

France’s valeur locative cadastrale (VLC)- a property’s theoretical annual rental value - is used to calculate numerous property-related taxes, including the TLV and THLV.

TLV bills are calculated at 17 percent of the VLC in the first year (up from 12.5 percent before the 2023 Finance Law came into effect); and between 25 percent and 34 percent from the second year.

With inflation already adding to the VLC rate, owners of empty properties are likely to notice a significant increase in their bills when they are sent out in December.