Local taxes
If you own a property in France, you will be subject to two different local french taxes: the housing tax (Taxe d’habitation) and the property tax (Taxe Foncière).
The housing tax (Taxe d’Habitation)
This tax applies only to second homes, and is payable by the owners or occupants of the properties concerned (tenants). The amount is calculated directly by the tax authorities according to the occupation of the property on January 1st of the tax year. The amount is determined by multiplying the cadastral rental value of the property by the tax rates set by the local authorities.
The property tax (Taxe Foncière)
This is an annual tax payable by the property owner, whether or not they occupy the property. As with the taxe d’habitation, the tax base is the cadastral rental value.
If you buy a property during the year, the seller is generally still responsible for paying the tax for the current year, but it’s common to come to an agreement with the previous owner regarding the sharing of this tax.
The real estate wealth tax (IFI)
If you don’t live in France, only real estate located in France is taken into account for the wealth tax “Impôt sur la Fortune Immobilière (IFI)”, subject to the provisions of tax treaties between your home country and France. The IFI is an annual tax, assessed on January 1st of each year.
Taxable assets mainly include :
- Main residence, second homes, land and rental properties;
- Shares in non-trading property companies (SCI) ;
- Units held in real estate funds such as SCPI ;
- Shares in companies, provided you hold at least 10% of the share capital and up to the value of their assets.
Debts related to these assets are deductible if they existed on January 1st of the tax year, are borne by the owner and are related to the taxable assets. You will be subject to the IFI if the net value of your assets in France exceeds 1.3 million euros.
Tax is calculated on a progressive scale, with brackets ranging from 0.5% to 1.5%.
Be careful, because the IFI is a declaratory tax: it’s up to you each year to determine whether you have to declare your assets for IFI. However, if the tax authorities deem that you are liable for this tax, they may recover overdue payments with penalties over the following six years (extended statute of limitations for failure to file).
The IFI tax return is generally due at the end of May.
