Tax regulations after you purchase a French property
There is a number of things you will need to consider, tax-wise, after you have purchased property in France – whether this is as your permanent home or as a second home owner.
The main two taxes involved in owning property in France are the taxe fonciere and the taxe d’habitation. Together these taxes are the equivalent to UK Council Tax, and must be paid by all those owning a French property – regardless of whether you own it or not. Largely speaking, these taxes cover local services such as street cleaning, waste collection and municipal lighting.
You are liable for the taxe fonciere as the owner of the property, whether you live there or rent it out. This is the more expensive of the two, and the amount will vary according to where the property is located, as well as the cadastral value (the notional rental value). The local authority decides on the amount, meaning that some regions can be much more expensive than others.
You will be liable for the taxe fonciere as the homeowner, regardless of whether you live there or rent the property out.
The cadastral value is reviewed every year, so the amount due will often change. It is calculated on the buildings and land involved, and the owner is responsible for keeping information on any improvements, additions to the property and so on, up to date. The addition of a swimming pool, for example, or the change of use to a gîte will also affect the amount. This tax is payable each October, and it is important to let the tax offices know as soon as you purchase your French property; there have been cases in the past of the first bill going to the UK address of new owners, meaning that they don’t receive notification of it in time – and so paying it late and receiving a fine.
The taxe d’habitation is paid by the occupier of the property, whether this is the owner or a tenant. This means that if you own the property but rent it out, the taxe fonciere is your responsibility, but not the taxe d’habitation. If you do not rent it out, you will have to pay both taxes, and if you decide to rent a property in France, you will be required to pay the taxe d’habitation.
It is important to note that the taxe d’habitation includes the TV licence fee, so if you don’t have a television, let them know and it will be deducted from your bill. This tax is less than the former, but again varies from region to region – and is due in November of every year. Generally speaking, towns and cities will be more expensive than villages or rural properties.
If for any reason, you default on payment of these, you will be given a fine of 10% of the due tax by the local authority – and if you refuse to pay, French law allows the tax authority to take the money directly from your bank account.
If you refuse to pay your taxes, French law allows the authority to take the money directly from your bank account!
There are a few exemptions and discounts available. Some new builds may be exempt from both taxes for the first couple of years, and reductions in the taxe fonciere can be allotted for people aged over 75, those with disabilities and students – as long as the property is their main residence. Be aware, however, that this will only fly if you have submitted a tax return in France declaring your income. Total exemption from the taxe d’habitation may be given to those aged over 60, as long as they are not eligible for wealth tax and are on a low income. It is best to enquire at the local tax office about any of these reductions.