Owning property in France offers a wonderful opportunity to enjoy the country’s rich culture, picturesque landscapes, and excellent climate. However, understanding the tax obligations that come with owning French property is essential, particularly for foreign homeowners. This guide will help clarify the main property taxes in France, how they are calculated, and what foreign owners need to know to stay compliant.

Types of Property Taxes in France

When you own property in France, two main types of property taxes apply: Taxe Foncière and Taxe d’Habitation. These taxes help fund local public services and infrastructure, and while they may seem complicated initially, understanding them will make managing your property much easier.

1. Taxe Foncière (Property Ownership Tax)

Taxe Foncière is an annual property tax imposed on property owners, regardless of whether the property is used as a primary residence, a secondary residence, or remains unoccupied. Here’s what you need to know:

• Calculation: Taxe Foncière is based on the notional rental value of the property and varies depending on the local rates set by the commune (municipality) where the property is located.
• Due Dates: Bills are typically sent out in the autumn, and payment is due by mid-October. Late payments may result in penalties.
• Exemptions: Certain properties, including new constructions, can qualify for partial or total exemptions for up to two years. Other exemptions are available for elderly or disabled individuals, depending on income levels and specific criteria.

2. Taxe d’Habitation (Residence Tax)

Traditionally, Taxe d’Habitation was charged annually to the person residing in the property as of January 1st. However, recent tax reforms in France have gradually reduced this tax burden, particularly on primary residences.

• Primary vs. Secondary Residences: If the property serves as a primary residence, the tax may be significantly reduced or even eliminated due to government reforms. However, for secondary residences or holiday homes, the Taxe d’Habitation still applies in full.
• Local Surcharges: Some high-demand areas impose additional charges on secondary residences, which can increase the tax amount. Coastal regions and popular tourist areas may add a surcharge as a disincentive for secondary homes, often referred to as taxe sur les résidences secondaires.

Capital Gains Tax on Property Sales

If you decide to sell your French property, be prepared to pay Capital Gains Tax (CGT) on any profit made from the sale. This tax applies to non-residents and is calculated based on the difference between the purchase and sale prices.

• Tax Rate: The standard CGT rate for non-residents is 19%, with an additional social levy of 7.5% for EU residents.
• Exemptions: Properties owned for over 22 years are exempt from CGT, with a gradual reduction applied after five years of ownership.
• Principal Residence Exemption: If the property is your primary residence in France, you may be eligible for full CGT exemption. However, this generally applies only if you are a French tax resident.

Inheritance and Gift Tax

France has strict inheritance and gift tax rules, particularly for non-residents. Property owners should plan ahead to avoid high tax liabilities for their heirs. French inheritance tax rates vary based on the relationship between the deceased and the beneficiary and can be complex, so consulting a professional is often necessary.

Understanding Local Taxes and Syndic Fees

In addition to the main property taxes, foreign owners should also be aware of local taxes and charges that may apply. If you own an apartment within a copropriété (shared building), you’ll be required to pay Syndic fees for the upkeep of shared spaces and services, such as elevators, cleaning, and maintenance. These fees vary based on the building’s amenities and location but should be factored into your annual budget.

Payment Options and Staying Compliant

The French tax system offers a range of payment options, including online payments and automatic bank deductions, making it easier to stay on top of deadlines. Late payments can incur additional charges, so setting up a direct debit may help you avoid penalties. Additionally, all tax information and due dates are accessible through the impots.gouv.fr website, where you can also manage your account and pay bills.

Need Help Navigating French Property Taxes?

Owning property in France is rewarding, but staying compliant with French tax obligations can be challenging, especially for foreign homeowners. At French Property Care, we offer comprehensive support for British and international property owners, managing all aspects of property taxes, Syndic fees, and administrative tasks. Our goal is to provide peace of mind, so you can enjoy your property without the stress of navigating French tax laws.

Contact us today to find out how we can simplify property ownership for you in France!