French Homeowner Taxes Explained

iStock_000050097660_Small copyIf you are thinking of moving to France or have recently made the move, you must understand the two types of council tax in the country. While two types of council tax may seem like bad news, the good news is that one includes your TV license fee!

So what do you need to know? Alexis Goldberg, of the and resident of Languedoc, explains all you need to know.

She says: “The two taxes are taxe foncière and the taxe d’habitation. All property owners, whether permanent residents or second homeowners, must pay these and together they are equivalent to UK Council Tax. They both, largely speaking, cover local services such as street cleaning, waste collection and municipal lighting.

“The taxe foncière is levied on property owners, so whether you live in the property or rent it out, you are liable for this. It 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 – or notional rental value. The local authority decides on the amount and some regions are much more expensive than others.

“The cadastral value is reviewed every year, so the amount due can 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 updated. The addition of a swimming pool, for example, or change of use to a gîte will affect the amount.

“It is payable each October and it is important to let the tax offices know when you buy your French property, as there have been cases of the first bill going to the UK address of new owners, meaning that they don’t receive notification of it in time, thus making them pay late and incur a fine.”

She explains the second tax: “The taxe d’habitation is paid by the occupier of the property, whether they are the owner or a long-term tenant. So, if you own the property but rent it out, the taxe foncière is your responsibility, but not the taxe d’habitation.

“If for any reason a renter defaults on payment of this, they will be given a fine of 10% of the due tax by the local authority and if they refuse to pay, French law allows the tax authority to take the money directly from their bank account!

“If you are considering letting a property, you are pretty safe, since tenants do not normally want to risk such proceedings. Note that the taxe d’habitation includes the TV license fee, so if you don’t have a TV, let them know and it will be deducted from your bill.

“The taxe d’habitation is less than the former, and again it varies from region to region. Generally speaking, towns and cities will be more expensive than villages or rural properties. This tax is payable in November each year.”

Goldberg adds: “There are a few exemptions and discounts available. Some new buildings may be exempt from both taxes for the first couple of years and reductions in the taxe foncière 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.”

Make sure that you fully comprehend all of your financial and legal responsibilities in whichever country you decide to buy a property.

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