Property Tax in France
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
[br] Property Tax in France is an important part of the French Tax scenario. One is liable to pay a property tax if he/she owns a property in France. French Property Tax is divided into two groups namely, ‘Tax Fonciere’ and ‘Tax de Habitation’.
Taxes are paid by the owners irrespective of the fact whether they have rented it on a holiday or they own the house. Tax Fonciere is paid by the owner and Tax de Habitation is paid by the person occupying the property. If there is a possibility on the part of a person to occupy a property even then on the basis of possibility that person must pay taxes.
The determination of the tax rates is done by many institutions like the collectivite territoriale, the local autonomous bodies of the region and the beneficiary department. The rates of taxes vary with the various regions. Sometimes the difference is at an extensive rate. The rate of Tax Fonciere is more than that of Tax de Habitat; sometimes it’s twice more than the rate of Tax de Habitat. These taxes are normally paid at the beginning of the year, preferably on January first for that entire year. The habitation tax could be paid on a monthly basis in the form of installments. The bills of the taxes generally reach by August or September and the taxes should be cleared by October or November. It is mandatory.
Calculation of the Taxes
The calculation of Tax Fonciere is done on the basis of an anticipated value of the property in an open market. These prices vary according to the variation of the national prices. The tax authority reviews the prices every year. Certain allowances are provided on the value and after the deduction of those allowances the amount is multiplied by the present tax rate. Then a fee of collection is added which is around 2.5% for the state.
Different types of rates are imposed for a finished property and a property under construction. For the proper calculation of the tax rate the owner must declare his property to the authority at least three months after the completion of the construction. Any kind of changes should be reported as early as possible to the tax authority otherwise no exemptions would be allowed on the tax rates. Tax de Habitation is calculated on the basis of the anticipated value of the property as well.
Tax Exemptions
Permission is required to plan a house on a land in France. Any kind of addition to the existing house also needs to be informed to the tax authority in order to obtain tax exemptions. However, if the land is used for agricultural purpose or is used for business or for accommodating a student the owner does not have to pay any taxes. Tax exemptions are also there for senior citizens.
Capital Gains Tax
Gains that are received from the sale of real estate or shares are taxable by the authority. However, if the owner of a house plans to sell his real property under any special reason or because he possesses another house then the owner is liable to tax exemptions. But this facility is available only in the property has been used by the owner for two years. However, one could obtain a 100% tax exemption if he/she has disposed a property after using it for 22 years. If one resides in a country which has entered into a double tax treaty then the owner can credit the tax paid in France against any kind of capital gains tax in his country.
The Inheritance Tax [br]
When a person buys a property to reside in France then after his death his property goes to his heirs. But the division of the property depends on the number of survivors. Only after the survivors have received their share of property that some amount of land could be gifted by the owner. Even in case one has received a property as a gift from someone he/she is liable to pay taxes on the property. After some allowances 5% tax is imposed on the spouse who is living, 40%-35% of tax is imposed on the children and 35%-45% of tax is imposed on the brothers and sisters. In case of joint property the living partner has to pay tax.
Property transactions are done by notaries in France. They play a very important role in the transaction. Notaries are government officials, hence it is mandatory to involve them while paying taxes. They also collect taxes in certain cases.
One is liable to pay taxes in France if his property is in France even if the owner does not reside in France.
