Last Updated on November 21, 2024 by Asen Yanev
French property taxes – Taxe d’Habitation, Taxe Foncière, and Cotisation Foncière des Entreprises (Local tax on businesses known as CFE):
Who has to pay them?
What is the deadline to file?
Can you overpay CFE tax and get a refund?
Can any tax deductions be claimed?
Everything you need to know!
Local Property Taxes in France
It’s hard enough to come to terms with tax rules in your own country, without having to familiarise yourself with international tax regulations too!
So, if you’re a non-resident landlord with a property in France, you may be feeling daunted by the prospect of managing your French tax obligations.
After all, there are a lot of different types of tax charges to consider.
Most property owners will be aware that they are required to submit a French property tax return to the French Tax Office if they are earning rental income.
But aside from rental income, there are several other property taxes that real estate owners should be aware of.
Take Taxe d’Habitation, Taxe Foncière, and Cotisation Foncière des Entreprises (Local tax on businesses known as CFE) for example. These local property taxes in France may apply to your property, depending on your circumstances.
In this guide, we will outline everything you need to know about your French property obligations and how you can claim your CFE refund.
- In this article:
- What taxes do I need to pay on my French property?
- What is Taxe Foncière – the French Land Tax?
- How is Taxe Foncière calculated in France?
- What are the Taxe Foncière exemptions?
- What is the French Taxe d’Habitation (Housing tax)?
- Who has to pay Taxe d’Habitation?
- Who is exempt from the French housing tax – Taxe d’Habitation?
- What are the housing tax rates?
- How to pay Taxe Fonciere or Habitation online?
- What is Cotisation Foncière des Entreprises (CFE) tax?
- Who has to pay CFE?
- Can you pay too much CFE and get a refund?
- Which countries have tax relief agreements with France?
- What are the deadlines for Taxe Foncière, Taxe d’Habitation, and CFE?
- Who can help me with my French tax obligations?
What taxes do I need to pay on my French property?
The two main local property taxes you need to be aware of when owning a property in France are:
-
Land Tax (Taxe Foncière or Property ownership tax)
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Housing or Residence Tax (Taxe d’Habitation)
These taxes are important to understand and budget for when owning a property in France.
The Taxe Foncière and Taxe d’Habitation usually amount to approximately 10 to 20 euros per square meter per year each.
If you lease your property to a professional management company, they typically cover the Taxe d’Habitation, and you only have to pay the Taxe Foncière. Additionally, when you purchase a new property, you are exempt from paying the Taxe Foncière for the initial two years.
Rural gîtes, tourist rentals, chambre d’hôtes, and certain hotels in rural development areas can also be exempt from local rates (Taxe d’Habitation and Taxe Foncière) by submitting the required forms to the local tax office before December 31st, subject to the local council’s decision.
Below we will outline also Cotisation Foncière des Entreprises known as (CFE) tax, or Business property tax, and discuss how you can apply for a CFE refund with our help.
There is also a waste collection tax which is another tax you need to be aware of.
Got questions? Request a free callback from a tax expert.
What is Taxe Foncière – the French Land Tax?
Taxe Foncière (also known as property ownership tax) is a local property tax in France paid by property owners, and it applies whether the owner lives in it or rents it out.
It consists of two parts: tax on buildings and land tax. The tax on buildings applies to habitable properties, even if they are not occupied.
Tax Fonciere (also known as tax Foncier) applies to different kinds of properties like homes, businesses, factories, and offices.
Even land is taxed, but not as much, and there are exceptions for agricultural buildings.
If you plant new trees, you can get some tax relief. The tax is based on the year it’s implemented and needs to be paid by the property owner(s) on January 1st of that year.
If a property is sold during the year, the tax is adjusted by the notary handling the sale.
Exemptions are available for the main home if the occupant is 75 or older or qualifies for certain disability or old-age allowances.
Low-income households may also be exempt based on income benchmarks and family units.
Homeowners aged 65 to 75 with income below specific limits can receive a flat €100 discount on their main home’s Taxe Foncière unless they share the house with non-spouse dependents.
Newly constructed or renovated main homes are tax-exempt for the first two years, subject to certain conditions.
To claim these benefits, specific tax forms must be submitted within 90 days of property completion or renovation.
How is Taxe Foncière calculated in France?
The Taxe Foncière is an annual local property tax that needs to be paid each year.
The tax amount is usually determined based on the value of the property (called the valeur locative cadastrale (VLC)) as of January 1st of the year in which the tax is due.
The rates can vary depending on the type of real estate.
Local tax authorities use rules and scales set by the municipality to calculate the tax.
Factors such as the property’s size, location, type, and any improvements or renovations made to it also play a role in determining the tax amount.
What are the Taxe Foncière exemptions?
Starting in 2023, certain groups are no longer obligated to pay the property ownership tax. If you receive ASI ( supplementary disability allowance) or ASPA (this is a solidarity allowance for the elderly, a monthly benefit granted to low-income pensioners), you’re exempt from paying the Taxe Foncière.
Importantly, there’s no need for any means of testing to qualify for this exemption.
People aged 75 and older can be exempt from the tax, but this depends on their income (means testing).
The exemption also applies to their second home or vacation property, if they have one. If you receive the AAH (allowance for disabled adults), you also get this exemption, based on your income.
Changes in tax laws have removed certain marital rights for claiming exemption. For instance, if someone claims ASPA, they need to be the property owner or joint owner to get tax relief for the couple. This rule also applies to means testing.
Thankfully, these exemptions should be automatically considered after filing a 2023 tax return.
If you declare an income less than €27,947 for the main part of the family quotient, plus €6,530 for the first half-part, and an additional €5,140 for each additional half-part, you can get a reduction.
Owners might qualify for an exemption if a property meant for rent is unexpectedly empty. The same goes for commercial or industrial properties. But, in all situations, the vacancy has to be at least three months long.
If you buy a new house or one that’s still being built, you usually don’t have to pay property tax for two years after it’s done.
If it’s your main home and meets certain conditions, you can be tax-free for 15 years.
The conditions are: the house was funded by an HLM loan (An HLM loan in France is a special kind of loan from social housing agencies to help people with limited income afford housing), or was 50% supported by state loans unless it was a zero-interest loan.
As you can see there are many situations where exemptions apply, and here is a recap of some the most common:
For buildings:
- State-owned properties, rural buildings used by farmers, and buildings for photovoltaic electricity production are always exempt.
- New constructions are exempt for 2 years (with declarative obligations).
- Certain buildings financed by subsidized loans or in specific zones enjoy a 15-year exemption.
- Dwellings completed before 1989 with energy-saving works can receive a 50% or 100% exemption for 3 years.
- New energy-efficient homes completed from 2009 can get a 50% or 100% exemption for 5 years.
- Social housing is exempt for 15 to 30 years.
- People over 75 and those with disabilities are exempt from property tax on their primary residence.
- Low-income individuals may also qualify for exemption based on income thresholds.
- Individuals aged 65 to 75 may receive a €100 rebate.
For unbuilt estates:
- Municipalities can offer 5-year exemptions for certain plots operated using organic production methods.
- Young farmers with installation aid may get 50% relief (or 100% if decided by local authorities).
- Additional relief may be available in case of crop or livestock loss.
What is the French Taxe d’Habitation (Housing tax)?
Taxe d’Habitation (Housing or Residence tax) is a payable tax, either by the owner of a property or a tenant who is renting a property on a long-term basis (one-year lease).
It applies to furnished second homes and related structures (garages and outbuildings).
Otherwise known as the ‘Housing tax’, this local French property tax is based on the characteristics of your home, its location, and your situation.
It varies considerably and is determined by each municipality, and is used by your local municipality to support community services.
Starting from 2023, things have changed regarding the Taxe d’Habitation in France.
Now, you don’t have to pay this tax for your main home anymore.
However, if your main residence is in another country and you are officially a tax resident there, any property you own in France will be considered a ‘second’ home by French authorities, even if it’s your only property in the country.
If you have a second home that you rent out to someone else as their main residence, it’s considered the tenant’s primary residence, and you’re not required to pay Taxe d’Habitation for that property.
This applies mainly to properties rented for an extended period and typically does not include second homes used for services like Airbnb.
Yet, there is an option for properties exclusively set up for short-term holiday rentals, and if the owner pays the cotisation foncière des entreprises (CFE) tax, they may qualify for an exemption.
That said, if you own a second home or any additional properties, you still need to pay Taxe d’Habitation for those.
Who has to pay Taxe d’Habitation?
Individuals responsible for paying the “Taxe d’Habitation” include both French residents and non-resident foreigners who own a second home in France.
If you let out a property on an annual basis, the tax is payable by the tenant. Any tenant occupying a property on 1 January on a permanent or extended basis is liable for the tax.
However, it is important to note that tenants of holiday lettings do not pay the tax.
And, if you move into the property mid-way through the year, the former occupier is legally required to pay the tax for the entire year, unless any private agreement to the contrary is made.
The specific dates for paying this tax vary each year.
Got questions? Request a free callback from a tax expert.