Thinking of buying a second holiday home in France? Then you need to take in to consideration additional costs!

The French government is getting closer to abolishing “tax de habitation” for principal home owners, but second home owners are now to experience additional costs.

Introduced under President Hollande and maintained by President Macron, this surcharge on the taxe d’habitation of résidences secondaires has existed since 2015. This law gives local councils the choice of whether to impose a surcharge, and an increasing number have decided to do so.

Originally when introduced in 2015, the permitted percentage increase was a uniform 20%. However since 2017, the law allows councils to increase the tax by between 5% and 60%. But only councils located in communes of more than 50,000 inhabitants where there is an imbalance between the supply of and demand for housing (leading to difficulties in accessing existing housing), can implement the surcharge.

The areas that this law really affects are:

  • Ajaccio
  • Annecy
  • Arles
  • Bastia
  • Bayonne
  • Beauvais
  • Bordeaux
  • Draguignan
  • Fréjus
  • Genève–Annemasse
  • Grenoble
  • La Rochelle
  • La Teste-de-Buch–Arcachon
  • Lille
  • Lyon
  • Marseille–Aix-en-Provence
  • Meaux
  • Menton–Monaco
  • Montpellier
  • Nantes
  • Nice
  • Paris
  • Saint-Nazaire
  • Sète
  • Strasbourg
  • Thonon-les-Bains
  • Toulon
  • Toulouse

The main purpose of the tax is to try and counter the growth of short-term holiday lettings offered via platforms such as Airbnb and HomeAway.

However all is not grim! If you choose to rent your home out to tenants on an annual basis, you will not be subject to the tax, which is then paid by the tenant.

The hope is that the tax will incite second-home owners to let their property out on an annual basis, although it seems highly unlikely as owners of holiday homes are always keen to use their own properties over the course of the year.

As of July this year 207 councils have decided to impose the charge. The overwhelming majority have imposed an increase of 20%, although a small number have set it at the maximum rate of 60%!

Those councils that have set it at the highest rate are:

  • Mouans-Sartoux
  • Saint-Nazaire
  • Bidart
  • Ghethary
  • Ustaritz
  • Gaillard
  • Saint-Cergues
  • Saint-Julien-en-Genevois
  • Vetraz-Monthoux
  • Paris
  • Bagnolet
  • Montreuil-sous-Bois
  • Ferney-Voltaire
  • Saint-Genis-Pouilly
  • Collonges-sous-Salève
  • Nice (to come into effect in 2019)

 

On a departmental level, the departments with the largest number of councils who have imposed the surcharge are

  • Alpes-Maritimes
  • Haute Savoie
  • Pyrénées-Atlantiques
  • Whole of the city of Paris

 

So make sure you keep yourself in the loop with French tax law and always speak to a tax specialist before you purchase your French property.

 

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