Taxe d’Habitation on Second Homes
22nd Nov 2022
More councils have been given the power to impose a surtax on second homes, but it is a measure whose impact has to date been marginal.
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Although the taxe d’habitation is being abolished for principal residences from next year, it will remain in place for second/holiday homes.
Since 2015 local councils in areas of house stress have been given the power to impose a surtax (surtaxe d'habitation pour les résidences secondaires en zone tendue) on the basic charge, which can range from 5% up to a maximum of 60%.
The councils concerned are those classified as a zone tendue, with a population greater than 50,000, amounting to 28 agglomerations, comprising 1,136 communes.
The primary aim of the law is to combat the number of properties that are being let out for tourist accommodation on such platforms as Airbnb, which is reducing the available accommodation to rent on an annual basis.
Last month the French parliament passed a law lowering the threshold of councils entitled to impose the tax to those in areas of housing stress with a population below 50,000.
Although the official list of eligible communes has yet to be published, it is estimated to affect around 4,000 new councils, located mainly in coastal and mountain areas. To find out if a commune is located in a zone tendue you can consult Savoir si un logement est situé en zone tendue.
Interestingly, the politician who promoted the new law has stated that his main objective in doing so had nothing to do with housing policy, but instead to provide cash strapped councils with an opportunity to generate new funds.
However, being given the power to impose a surtax is one thing; choosing to use it is another.
Figures from the government show that for 2021, of the original list of 1,136 councils who are authorised to impose a surtax, only around 20% actually do so.
In addition, only 73 of these councils have chosen to impose the maximum surtax of 60%, with the overwhelming remainder settling for an additional 20% on the basic tax.
It is certainly true to say that each year the number of councils imposing the tax or increasing the rate of the tax does increase, but the number concerned remains relatively modest.
The impact on second-home owners is generally marginal. Thus, assuming a basic tax charge of €1,000, a surtax of 20% would be an additional cost of €200 a year.
Many councils have chosen not to adopt the tax due to the potentially negative impact on tourism, which they wish to develop. Others do not consider it to be effective. Several councils where the tax has been imposed have reported that the impact on the number of second homes in the area has been insignificant.
In addition, those councils who have increased the tax are located primarily in four well-heeled geographic areas: the Côte d'Azur, Paris and its suburbs, the Basque Country and the border area with Switzerland.
Each council will decide next year if they wish to introduce the tax in their area, after which we will know for certain how many have chosen to take it up, and the rates that have been imposed.
There are certain exemptions to the tax, notably for those who hold a second home for business or professional reasons, as are those properties where the property is empty for reasons beyond the control of the owner, eg, major works.
In addition, where the property is let out the principal residence of a tenant the tax does not apply. Self-evidently, in such circumstances the property ceases to be a 'second home'.
Separately from the changes to the surtax on second homes, the Minister of Housing, Olivier Klein, has spoken recently of the need to tighten the taxation of tourist rentals, in order to encourage owners to put their property on long-term rental. A suivre.
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