Property taxes and charges in France are notoriously complicated. There are various local and national taxes to take into consideration, plus maintenance charges if you purchase an apartment or villa in a private complex. And of course the French laws of succession also apply to foreign residents so there are lots of factors to take into account when buying property in the South of France.
To help you get to grips with all the legalities of French taxes and charges, we’ve put together a quick overview of the French admin situation. We’ve explained all of the taxes and charges which you might be liable for when you purchase a luxury property on the French Riviera. So, with our help you can sit back and relax knowing you’ll be ahead of the game when next year’s tax season rolls around.
Property Tax in France
Land Tax/Taxe foncière
The French taxe foncière is an annual property ownership tax which is payable in October every year. It is payable by the individual who owns the property on the 1st January of the same year and is applicable whether you live in your property or rent it out. The taxe foncière is used to fund local services within the commune and department and usually includes the taxe d'enlèvement des ordures ménagères (TEOM) for waste collection services.
The amount is calculated based on the size, condition and location of the property and varies widely in different areas. Unsurprisingly city centre locations generally pay more taxe foncière than properties in rural areas.
The taxe foncière can be paid yearly or monthly but penalties will be added for any late payment. Additionally certain properties such as new builds, additions to existing buildings and rural conversions are exempt from the taxe foncière for 2 years. Your notaire is the person to ask about whether this exemption applies to your property.
If you decide to sell your French Riviera property, it’s also worth noting that the new owner is legally obliged to pay you the balance of the year’s taxe foncière on a pro-rata basis.
Local tax/Taxe d'habitation
The taxe d’habitation is an annual residency tax which is imposed on the individual who is resident in the property on the 1st January. Taxe d’habitation only applies to what the French consider to be habitable buildings but it does apply to secondary residences as long as the property is furnished and has basic utilities. So even if you’re not physically in your French Riviera holiday home on the 1st January, you will probably still be liable to pay the taxe d’habitation. On the other hand, if you rent out your property on a long-term basis, your tenant will pay the taxe d’habitation instead.
The taxe d’habitation is calculated using a notoriously complex formula but it is generally based on the condition, size and location of the property and in certain cases the owner’s income. If you own a television set in France, the annual television licence fee (or redevance audiovisuelle) will also be included with your taxe d’habitation.
Capital gains tax/Impôt sur les plus values
Should you decide to sell your secondary residence, you will be liable for capital gains tax or impôt sur les plus values. This tax is only applicable when selling a secondary residence and is therefore not applied if you sell your principal residence.
It’s calculated using another fiendishly difficult formula but basically applies to the difference between the original purchase price and sale price. It also includes the cost of the transaction plus the cost of any work and/or improvements carried out on your property by a professional (this does not include general maintenance and repairs).
We recommend keeping all invoices and receipts for work carried out on your property in case the capital gains tax applies to your sale further down the line. We also highly recommend contacting your notaire for more information about how to calculate any capital gains which may be taxed if you decide to sell.
Wealth tax/Impôt de solidarité sur la fortune
The French wealth tax or ISF as it’s usually known, only applies to a small percentage of individuals. It is determined on the 1st January each year and is based on the total net assets of residents and non-residents alike as of a certain sum. The ISF is then calculated in tax bands according to the total net assets of your household.
If you become resident in France, you will only be taxed on your French assets for the first 5 years of residency. Any assets located outside of France will be exempt from the ISF for 5 years. After you have been resident in France for 5 years, if your global assets exceed 1,300,000€ they will also be liable for taxation. Check out the current rate of wealth tax in France on the French Government’s Tax office website.
Property Charges in France
Maintenance Charges/ Charges de copropriété
If you decide to purchase an apartment or villa set in a private complex or park, you’ll receive monthly or quarterly maintenance and service charges. Your notaire will be able to give you a complete breakdown of any charges related to your property before the sale is finalised. These maintenance charges are usually based on the amenities available in your complex. Properties with swimming pools, tennis courts, concierges or other facilities will typically have higher charges but these fees can also include major non-routine expenses for the complex.
Property Laws in France
French Succession Laws/ Droit de succession
French succession laws are very specific and they apply to all owners of property in France, both residents and non-residents alike. In August 2015 new European regulations were passed to allow EU citizens to choose whether to apply succession laws of their place of residence or their place of birth. But this choice must be made before death to apply to your estate, otherwise French succession laws will apply.
Under French inheritance law, children are protected heirs and are automatically entitled to your estate. However spouses/partners have no such protection and can be disinherited or overlooked when it comes to succession. However, despite the fact that children inherit your property, you can state that your partner has what is called usufruit, which means that they have the right to reside in your property until their death and your children cannot deny them that right. If you have children, a portion of your estate known as ‘la réserve’ will be automatically accorded to them upon your death. The rest of your estate known as the ‘quotité disponible’ can then be disposed of amongst your family.
To ensure your estate is dealt with according to your wishes, we recommend contacting your notaire who will be able to give you advice about the best way to deal with inheritances. You’ll need to do this before signing the deed of sale though as it is almost impossible to make any changes once this has been officially registered.
Non-trading real estate company/ SCI - Société Civile Immobilière
An SCI is a specialised French company for property ownership and management. It enables property purchases by multiple individuals, facilitates ownership and transfer of property and creates certain tax advantages. An SCI can own more than one property including principal and secondary residences and can also own property which is let unfurnished to tenants. But by definition an SCI is a non-trading company so can’t be used to manage holiday rental accommodation for example.
If you plan to set up an SCI to purchase your French Riviera property, we recommend contacting your lawyer first. The registered address of the SCI must be in France and an SCI affords no limited liability. Therefore the shareholders of the company will be liable for any debts the SCI incurs in proportion to the number of shares they own. An SCI also has to produce detailed company accounts every year which must be filed with the French authorities. For an easy way to deal with all the relevant paperwork, our top tip is to appoint a French accountant. Hand everything over to them to deal with and then relax and enjoy the good life in the South of France.
Property Trade Associations
For more information or details about French real estate transactions, the associations which represent Estate Agents in France are listed below:
FNAIM (Fédération Nationale des Agents Immobiliers) UNIS (Union des Syndicats de l'Immobilier) SNPI (Syndicat National des Professionnels Immobiliers) CNAB (Confédération Nationale des Administrateurs de Biens).