Property taxes in France for foreigners1469
Property taxes in France are often the subject of many questions from foreigners. No wonder! The French property tax system is not the simplest in the world. On the contrary! Nevertheless, according to some comparative European fiscal studies, France is among the most attractive countries in terms of property taxes. As a non-resident who owns a property, you will be liable for the same taxes as French residents. This article of our guide helps you understand the workings of property taxes in France. Depending on your choice to stay fiscally domiciled in your country of origin or become a French tax resident, you will find out what taxes you are liable for.
There are two taxes in France that you cannot avoid paying. First, the residence tax (taxe d’habitation) and then, the property tax (taxe foncière). There is also a third tax that you may or may not be liable for depending on your situation. Indeed, depending on the value of your property, you will also have to pay a wealth tax.
The residence tax
The residence tax is due by any person who has the availability and the benefit of a property in France. You, as the owner, or your tenant (if you rent your property out) must pay this tax each year. Actually, it is due by the person occupying the property. There are two options to determine if you are going to be liable for this tax.
- You rent your property in France. In this case, your tenant is liable for this tax. Therefore, the tax administration will address the tax to him.
- You do not rent your property. Therefore, even if you are not a tax resident in France, you must pay this tax to the tax authorities.
Be aware that it is generally illegal to write leases for less than 12 months in France. A nine months lease is possible if your tenant is a student. So, on the assumption that you will not rent your property, you will have to pay this tax every year. If you sell your property during the year, you remain liable for this tax. Indeed, as you were the owner of the property on 1st January, you will have to pay the tax.
The value of the residence tax varies. The amount depends on the land register rental value. This value corresponds in theory to the annual rent that you would yield if you chose to rent your property out. Tax Centres in France determine this value. They then apply a rate to this value to obtain the amount of your residence tax. Therefore, depending on the type of property you own and its location, the amount of this tax varies.
The property tax in France
The property tax is the second of the two taxes that you will be liable for. This tax is a local tax. It is due annually by the owner of a property whether he is a tax resident or not. This tax is levied by the municipality where your property is located. Unlike the residence tax, you must pay this tax to the tax administration even if you rent your property in France and a tenant is living there. If you sell your property during the year, it will be possible to include a share of this tax in the deed of sale on a pro-rata basis with the buyer.
Like the residence tax, the amount of the property tax is calculated on the land register rental value. By multiplying the land register rental value by a rate set by the municipality where the property is located, the tax administration will determine the amount you are liable for.
You will receive notice of this tax every year, at the end of August. You must settle the tax within the time mentioned on the notice. It often happens during the third week of the month of October.
The wealth tax
The wealth tax is a tax directly related to real estate. It is imposed on the owners of one or more properties in France when the total value of their assets is more than 1 300 000 €. Even if you are not a tax resident in France, you are subject to this tax. However, it only considers the value of your property(ies) in France and not all your personal assets (property in France + amount of your assets in your country of origin).
How can you determine the value of your property? In fact, this amount is not the amount you paid for its acquisition. Indeed, nearly all properties gain value every year. While it is easy to determine the value of the property the year you purchased it, it is much harder to do so five years later. In fact, the value of your property is simply the price you could sell it for if you placed it on the market at a set time.
This value does not follow specific calculation rules. It is a value which is assessed on a case-by-case basis, and it evolves every year. The best way to properly assess the market value of your property is to analyse the market in your area for similar properties at the time. Other documents can help you, for example, statistics on real estate transactions in your area published by Notaires. For the most accurate estimate, feel free to also consult a professional.
It can be difficult to get it right! In most cases, a margin of error of 10% in the assessment of the property value is acceptable. However, be careful. In the case of willful depreciation, you expose yourself to surcharges, penalties or even prosecution for tax evasion. To willfully under-estimate the value of your property(ies) in France can therefore have serious consequences! It is in fact a counterproductive strategy. Indeed, if you later sell your property, the tax administration will actually recover the unpaid tax depending on the sale price. In addition, if assets are deliberately underestimated or forgotten and passed on as part of an inheritance, your heirs will have to pay the unpaid tax.
In terms of the scale of this tax, although the threshold is indeed 1 300 000 €, the calculation scale starts at 800 000 €. To estimate the amount of this tax, you must begin by assessing the net taxable value of your assets. This is achieved by calculating the difference between the gross value of your assets and deductible debts. Among the debts that you be allowed to deduct, you will find.
- Your residence tax
- The property tax
- Your mortgage if it has been issued by a bank in France. You can deduct the outstanding capital on 1st January of the tax year as well as the interest accrued or due and outstanding on 1st January of the tax year
Once you have obtained your net taxable worth, a rate is applied based on the value according to the following scale.
|Net taxable value||Rate applicable|
|800 000 €||0 %|
|800 000 € and < or = 1 300 000 €||0.50 %|
|1 300 000 € and < or = 2 570 000 €||0.70 %|
|2 570 000 € and < or = 5 000 000 €||1 %|
|5 000 000 € and < or = 10 000 000 €||1.25 %|
|> 10 000 000 €||1.50 %|
For example. You own a property in France with a value of 2 600 000 €. You have already paid 1 600 € in residence tax and 2 400 € of property tax. The amount of your taxable net wealth is:
You can then calculate your wealth tax as follows:
Also, be aware that this tax is based on voluntary declaration and must be paid immediately. Indeed, you will not receive any tax notices. If you do not pay income tax in France, you must declare this tax no later than 15th July if your tax domicile is in Europe. In case of your tax domicile is outside Europe, you must declare the tax at the latest on 1st September.
Overview of property taxes in France
In summary, here is a comparative table of taxes that you must pay in France, depending on your situation, once you own a property.
|Tax name||Non-resident for tax purposes|
|Non-resident for tax purposes|
|Resident for tax purposes|
(Net value of assets in France 1 300 000 €)
(Net value of assets in France 1 300 000 €)
We hope that the tax system relevant to you, a non-resident foreigner owner of a property in France is clearer after reading this post. There are two property taxes you will have to pay yearly in France: the residence tax and the property tax. If your overall assets in France are over 1,3000,000, you will have to pay the wealth tax even if you are not a fiscal resident in France.