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.