You and Your Taxes

When buying a property in France bear in mind that the costs are different to those in the UK. There are more taxes for a start, including income, wealth, property, capital gains, and residential taxes. This can add up to quite a hefty sum. Even though the government has pledged to reduce income tax by a third in the coming years, tax in France is still quite high. Late payment of taxes incurs a charge of around 10%, so make sure you pay your dues on time! If you rent out your property in France, whether this is to a friend for a few weeks' holiday or 52 weeks of commercial rent, you will have to declare and pay income tax on the rental income (Revenu Foncier) even if you live abroad.

Property tax covers your contributions to local services like rubbish removal and street lighting and varies greatly depending on the region: oddly enough, the Paris area has some of the lowest rates in the country. You pay wealth tax if your annual income exceeds €720,000.

Residential tax applies to properties with a rental value over €4,600 on 1st January. Even if you rent or sell the property from 2nd January onwards, you have to pay the full year, not the new tenant or owner. Capital gains tax (CGT) is rather more complicated: suffice to say that the sale of second residences incurs CGT and the EU tax authorities are working together to track anyone who tries to dodge paying it!

Property Taxes

The two principal taxes on residential property are collected by the State for the benefit of the collectivités territoriales, namely the local authorities of the Région, Département and Commune. Both based on the property's theoretical rental value according to the local land registry, and is adjusted in line with inflation. The rates of tax will vary from region to region due to the varying rates of tax imposed by the regional and local governments.

* The principal taxes are taxe foncière
* and taxe d'habitation. Both apply to all residential property - houses and flats.

These taxes are each assessed at an individual rate voted by each collectivité territoriale. They vary in very substantial proportions from one location to another. The commune rate of tax is often higher in main towns than in suburbs or small villages. Before renting or buying a property it is therefore wise to request details from the estate agent or owner.

(Property used for a business orprofession is also subject to taxe professionnelle)

Habitaion Tax (Taxe d'Habitation)

The occupier of the French property is liable for this tax. It is due of the 1st January and is payable by the person who was the occupier at that date. There are exemptions for over 60s and also if the property is incapable of occupation due to it needing extensive renovation. The test if whether the property is furnished and whether you can convince the local mayor. If the tenant vacates the property during the year and fails to pay, the owner remains jointly liable, unless he notified the tax collector of the new address of the tenant.

Funamental Tax (Taxe Foncière)

The owner of a French property is usually liable for this tax, also known as 'impôt foncier', a land tax which is generally payable in one lump sum on the 1st January in each year. Unlike the taxe d'habitation, apportionment can be made between the buyer and seller. If there is an apportionment this should be stated in the contract for sale. This tax is even payable on unbuilt land. It may be divided into two parts, one for the building and some of the land surrounding it, the other for the remainder of the land. There are exemptions for some agricultural land and the owners of new property have, at the time of writing, a two year exemption. Property is defined in quite wide terms and includes, for example, boats permanently moored for habitation.