Having a landed property in France is a great idea. But there are taxes, though.
In this article, I’ll be revealing all you need to know about property taxes in France. This article is an overview of the property tax in France, precisely designed for smart businessmen willing to invest in landed properties, expats living in France and foreigners thinking of buying properties in France from abroad.
I’m going to fill you in with basic information on French property taxes. In France, taxes on goods, property, labor, resources… are levied by the government, and collected by the public administrations.
Public administrations in France are made up of three distinct institutions, which include: social security association (ASSO), the local governments, and the federal government. Taxes in France are classified according to the institution charged with the collection of taxes and to the people who pay them.
What Is Property Tax In France?
Property tax simply defined is any tax concerned with real estate. It is an annual tax on real property. The France property tax is based on land taxes (Taxe Foncière), which means properties built in France will be taxed according to its value.
These properties consist of permanent constructions such as factories, estates, buildings which include stores, flats, houses, workshops, warehouses, etc. Once an individual or group owns a property in France, whether built or not, they become liable for the land or property tax.
For example, If you are buying a primary home in France, the property tax rate is around 1%. But if you are buying secondary homes, you will be charged 3%.
The tax is charged based on the estimated rental value of the property per annum, multiplied by a percentage set by the commune. There are also other variables used to determine the value of a property in France.
If you are already own a property in France, you plan on buying or even renting your’s out, you will have to pay the French property tax that is due.
Types Of Property Tax In France
There are two major types of property tax in France. There’s the sales tax and then the maintenance taxes.
- Sales Tax
Sales taxes are the taxes you pay when you buy or sell a property in France. While maintenance taxes are paid for land or property that you already own or rent. You should also know that there are other costs attached to property sales in France. These include stamp duty, VAT, agent commission, etc.
When an individual sells a property in France, and there is an increase in the value of the property, he has to pay a capital gains tax on the sale.
- Maintenance taxes
Maintenance taxes are taxes you pay once you own a property, there are two different types of property maintenance tax in France. There are the land tax and habitation tax.
1. Land Tax (Taxe Foncière )
Taxe foncière also called land tax is a type of maintenance tax in France that is paid by the owner of a property, whether he/she lives there or not. Taxe Foncière dictates the taxation rate/value of these properties.
The tax base is usually 50% of the notional rental value of the building and land/location value. This value is usually determined by the tax administrators.
The tax is charged based on the estimated rental value of the property per annum, multiplied by a percentage set by the commune. If you are already own a property in France, plan on buying or even rent it out, you will have to pay the French property tax that is due.
The financial statement for the French property tax is sent my mail around the last quarter of the year. You can also choose to pay the tax in advance by monthly direct debit or in installments.
2. Habitation Tax (Taxe d’Habitation)
Habitation tax is another type of property tax in France that is paid by the occupant instead of the owner. Similar to land tax, you’ll be sent a financial statement or letter around the last quarter of the year. The letter contains your tax bill and information.
Similar to the land tax, maintenance taxes also include the extra levies for high rated houses and on secondary homes but there’s no tax relief for children. You’ll need insurance for that.
If you have a property in France as your second home but you do not live, you will still have to pay property taxes. But if you rent the property, the tenant will be the one paying this tax.
Property tax in France is restricted to annual taxes and excludes one-off taxes on transfers. You can also pay it via the internet, or by cheque. Whether it is the land tax or habitation tax, owning a property in France is a costly investment.