News Digest: 2023 Tax Increases on Second Homes - FrenchEntrée (2024)

FAQs

Is there tax on second homes in France in 2023? ›

Here are some situations: If you own a vacant rental property, you have to pay the housing tax. A tenant with a secondary residence on January 1st, 2023, has to pay the full-year housing tax, even if they move during the year.

Most second homeowners pay a rate equivalent to that owed through the taxe foncière system, although there are thresholds and exemptions, which mean the tax charge may change. For example, second property owners can claim housing tax relief if they have children, with deductions of 10% to 15% for every dependent child.

What is the Declaration d'Occupation, France's new property tax form? The Declaration d'Occupation is a new French tax declaration that must be filled in by all property owners as of 2023, declaring the occupancy status of their property/properties.

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.

Automatic Long-Stay Visa Right

The new law stipulates that Britons with second homes in France will automatically obtain a long-stay visa right. This eliminates the need for the lengthy process usually involved in obtaining a long-stay visa, which previously required extensive online and in-person paperwork.

The second-home tax rise will vary considerably by commune, from a 5% increase in some up to 60% in others. More than 500 communes across the country have chosen the maximum 60% surcharge.

Beyond capital appreciation, owning a second home in France opens the door to potential rental income, especially if you invest in tourist areas. Seasonal rentals can offer very interesting returns during high season periods, enough to make your investment profitable!

Members of the Second Estate did not have to pay any taxes. They were also awarded special priviliges, such as the wearing a sword and hunting. Like the clergy, they also collected taxes from the Third Estate.

A property is viewed as a second home by the IRS if you visit for at least 14 days per year or use the home at least 10% of the days that you rent it out. Many homeowners rent out their second home, but personal and rental use affects taxes in different ways.

In 2022, households that have not yet benefited from the removal of their housing tax are eligible for a 65% exemption on their primary residence, regardless of income. This exemption was 30% in 2021. The housing tax will be permanently eliminated in 2023.

What is the double tax relief in France? ›

France and United Kingdom have signed on 19 Juin 2008 in London a new tax treaty in order to provide double-taxation relief and to prevent tax avoidance and fraud concerning taxes based on income and capital gains.

Résidence secondaire - A 'secondary residence' is any dwelling that you own which is not your primary residence. The most common category is second homes, but it can also include property that you rent out. The most common definition of this is one that you spend less than half the year at, but there are other factors.

The taxe d'habitation or THRS

Council tax hasn't completely disappeared! It still applies to second homes, i.e. furnished premises and outbuildings that are not your main home. Like property tax, it is based on your situation in relation to the property on 1 January of each year.

The 17.2% tax surge post-Brexit: what it means for you

Before Brexit, UK residents owning a second home in France paid a standard social levy of 7.5%. This was charged on the net rental income and capital gains of the second property and was the same for both French and non-French citizens.

The capital gain generated after the sale of a second home is taxed on income tax at a rate of 19% after deduction, depending on the length of time the property is held. If the age exceeds 22, the owner will be exempt. The capital gain is also subject to social security contributions, up to 15.5%.

Since April 2023, when selling property in France, specifically in the case of an individual house or a building consisting of several dwellings classified F or G by the DPE and owned by the same individual, it is mandatory to provide the future buyer with an energy audit.

Calculations: The tax is typically computed as a percentage of the property's assessed rental value and is levied annually. The percentage varies depending on the duration of property vacancy, with higher rates for prolonged periods: 17% for the initial taxable year. 34% in subsequent years.