French housing tax cuts 2018 – will you benefit?

One of Macron’s promises during his election campaign was to abolish the payment of the Taxe d’Habitation for up to 80% of households, deeming the tax unfair. This local housing tax, which is paid by most residents in France, is based on declared income and where you were living on the 1st of January of the tax year.

The planned measures could see an initial 30% reduction in your residential tax bill from November 2018. It is even possible that in three years’ time you won’t have to pay this tax at all.

If it goes ahead, and you are eligible with income below a certain threshold, then you will benefit from a reduction of 30% in 2018, then 65% in 2019 and complete abolition by 2020.

How can you calculate what you will pay?

To benefit, the total income of the household must not exceed certain limits. It will be calculated based on declared income for 2017, and on your ‘revenu fiscal de référence’ (you can find this on the front page of your tax bill, the avis d’imposition under References).

The proposed thresholds are as follows:

1 part – 27 000
1,5 part – 35 000
2 parts – 43 000
2,5 parts – 49 000
3 parts- 55 000
3,5 parts – 61 000
4 parts – 67 000
4,5 parts – 73 000
5 parts- 79 000

(See the income tax page here for information on calculating the number of ‘parts’)

So, for example, a single person who has a ‘revenu fiscal de reference’ of €27000 will benefit from a reduction of 30% on their 2018 housing tax bill. The threshold increases depending on how many parts. For a single parent who lives alone with their two children, the threshold increases to €49000 euros.

For those whose income slightly exceeds the threshold, for example a single person with no children and an income of €28 000, the rate of reduction will decrease as the income increases. This would allow a gradual withdrawal from paying the tax, but slightly slower than for those whose income is lower than the threshold.

This doesn’t affect anyone who is already exempt/partially exempt through previous rules, and anyone who pays the tax on wealth (ISF, which will become ISI in 2018) will not be able to benefit from this reduction.

If you need more information on the different housing taxes that apply in France, see our Property Taxes section.