French Property Tax Hikes Scheduled for 2022
Volume XX, Issue 13
I’m the first to sing the praises of French property taxes. My 2021 property taxes for a two-bedroom apartment in Le Marais of Paris were 635€. If this same apartment existed in Los Angeles, the annual taxes would be about $14,500 based on the California rate of 1.25% of the value of the property in US dollars! Consistently, I ask our clients how much tax they pay for their US properties and it seems to average about 10 times what they’d pay for the same property in France. And in this case, more than 20 times!
So, you can understand why I can sing the praises of taxes in France. But, according to a recent article in The Local, property taxes are set to reach a record high this year. This doesn’t worry me personally too much given how much worse it could be!
There are two taxes in France to consider: Taxe d’Habitation and Taxe Foncière. Taxe d’Habitation is being phased out for primary residents, so I no longer pay it at all. If you rent an apartment long-term, then you’re likely paying this tax on behalf of the owner…if you lived in the property on January 1st. The Local says that 20 percent of the French will be paying this tax in 2022, but eventually only secondary residences will be responsible for it.
It seems to me that the government must find ways of making up for the loss of revenue from the Taxe d’Habitation, and that’s why they are hiking up the Taxe Foncère that is paid on all properties. They had to find the money somewhere, let’s face it. And inflation pays a key role in the increase.
The calculation for the tax is not a simple formula, like it is in California with a simple percentage of the value. Nothing is “simple” in France, and I joke that the French aren’t happy unless it’s somehow challenging and complicated. Anyone living here knows how true this is, even the French themselves. The calculation is based partly on the rentable value of the property. And that’s pretty funny considering that Paris has rent control and therefore rents in the capital city aren’t very high compared to the value of the property. Other factors include location because local authorities can set their own rates.
The increase scheduled for 2022 will be 3.4 percent, the most increase since 1989, affecting 32 million property owners. But, the bottom line is that we can all anticipate about a 15 percent higher tax bill this coming year compared to last. That means my bill might be close to 730€ for the year instead. It’s not nothing, but it’s not $14,500 either!
In areas of France where there is a housing shortage, the local authorities can add additional charges. As it stands, we are still paying for an audio-visual license (if you have a TV on the premises) that will be phased out if Emmanuel Macron wins the election. This tax stems from when television was provided by the government, and even though the source of our programming has changed, it was never removed.
Mark your calendars for when the taxes are due. October 1st is the deadline for Taxe d’Habitation for secondary home owners and another 20 percent of certain French households. October 13th is the payment deadline for paying the Taxe Foncière via an online platform. October 19th is the deadline for paying Taxe Foncière offline—by check or credit card. November 15th is the deadline for paying the Taxe d’Habitation offline—by check or credit card. And November 21st is the deadline for paying the Taxe d’Habitation via an online platform.
Confused? I told you nothing is simple in France! Not even payment deadlines! But, try not to miss them, or expect a penalty of 10 percent!
If you’re worried about not having received the tax bills, you can get them online. Just create your own account and voila(!)—you now have access to all your tax bills and documents!
For more information about property taxes in France, visit Notaires.fr.
The Adrian Leeds Group®
P.S. If you are considering a property purchase in France, don’t do it lightly. Let us help you make the smartest decisions to ensure you make the best investment you can, including the ramifications of French law on inheritance and taxes. Contact us to learn more.