Property Tax In France

When it comes to buying it really helps to know about taxation on French property! The taxman is out there and once you step into his waters it definitely pays to know what you are doing.

As a property owner in France the bottom line is you are liable for two taxes. The amount you pay will be based on the theoretical value of your house as determined by the local land registry. All things are not equal and you will find taxation rates differ from region to region.

Firstly there is 'Taxe d'Habitation'. This is payable by the occupier and not necessarily the owner if the dwelling is rented out. The 'impot' is due at year-end, and paid retrospectively. Not all have to pay it, exemptions exist for the over 60s, for unoccupied property that is non-habitable due to a poor state of repair or at the discretion of 'La Mairie'. It does pay to be on good terms with the local Mayor if you want to get the best taxation value on your French property.

The second is 'Taxe Fonciere'; again payable at year-end, this land tax is calculated in two parts. The first part comprises the building and its immediate surrounding land, and the second tier on any land included in the property other than that. If you buy a chateau in Gironde that includes 12 hectares of prime vineyards you will expect to pay considerably more than for a village house, with a small back yard in Dordogne. Be aware that land designated for building purposes is subject to this tax whether or not any structures have actually been erected. However, some forms of agricultural land are exempt, whilst those who have built new houses enjoy a two year moratorium before they are expected to pay.

If you are in the process of purchasing and have signed  'Un Compromis du Vent' and completion has not occurred when this tax falls due there will be an apportionment of liability between buyer and seller. Be sure your 'notaire' stipulates this when the initial agreement is drawn up.

If you are a non-resident landowner youcould find yourself liable for an array of French taxes including income tax, TAV or VAT, Wealth Tax and Capital Gains. If you fall into this category namely you have a house in France yet live in say Dubai it pays to seek the advice of a tax consultant. This is particularly important if you have bought property to rent out because you must make out a tax return 'Impot sur le Revenu'. For those who live elsewhere in Europe the deadline for submitting the form is April 30th.The French Income Tax rate is calculated in a series of bands. If your rents are less than Euro 4191 euros you are tax exempt, between 4191 euros and 8242 euros you will pay 7.05%. This will rise to a maximum of 49% on earnings of 47131 euros or more. There are deductions allowable against tax which include other taxes, management expenses such as paying a caretaker or using the services of a security company, mortgage interest proving you have secured the loan in country and repairs and maintenance. You need to know these things if you want to secure the best deal on property taxation in France.

By the way you are considered a French resident if your permanent home or professional activity is located in France or you spend more than 180 days per year in country. It pays to know about taxation on your French property because you will then have a grasp of your financial liabilities. Of course all rates and amounts mentioned here are subject to change.