Property Taxes and Charges
Understand the taxes and charges levied when buying property...
There are two taxes on all residential property. These are collected by the State for the local authorities. These taxes are assessed at individual rates according to location and can vary substantially. It is advisable to ask the estate agent for these details when looking at properties to buy.
Taxe foncière (land tax)
The taxe foncière is a land/community tax which is payable on the 15th October for that year. Many people make the mistake of thinking that it is paid for the year following the payment.
Very often the payment for the ‘rubbish collection’ is also included in this bill.
This tax varies from community to community and is generally much more expensive in bigger towns than in the country communities.
Penalties or fines are added for late payment. A monthly payment scheme can be arranged at the outset.
On the sale of a property, the new owner is obliged to pay the vendor the balance of taxe foncière on a pro-rata basis.
Taxe d'habitation (local taxes)
This tax is only due on a habitable building. The occupant of the property on the first day of January is liable for paying this tax in full. If a property is furnished and supplied with water and electricity this tax must be paid (even if it is only used occasionally). The amount of this tax varies depending on location, size and comfort of the property, and in certain cases the income of the person.
A tenant resident in a property on the first day of January in a year is liable for paying this tax.
Charges de copropriété (maintenance charges)
For those owning property such as an apartment within a complex there are maintenance and service charges to pay. These charges should be considered before signing the Compromis. The charges vary according to the size and quality of the complex, whether there are lifts, a swimming pool, gardens, tennis courts and other facilities.
French Succession Laws - the Law of Inheritance
French succession law applies to properties in France, even if the owners are not French nationals. Under French succession law a person may not leave their assets to anyone they please. Protected heirs come first, while the spouse or partner is treated very differently.
Advice should be taken from the Notaire. This should be put into effect before signing the Acte de vente. It is difficult to make changes once the Acte de vente has
been registered; it can cause serious consequences.
Changes have been agreed within the EU, to allow the succession law of the person’s nationality to be applied. It is expected that this will come into action during 2015, but even at this time a clause can be included saying that the national law should apply, rather than the French law.
SCI - Société Civile Immobilière
An SCI is a property company. Although it can be used to minimise succession tax by gifting shares to children during a lifetime, they are usually used by a group of unrelated people to purchase a property as co-owners. An SCI is meant to be non-trading, therefore it is not the right solution for those planning to run gîtes or chambres d'hôtes. The SCI can however own the buildings. From a UK tax perspective, the director of an SCI with free use of a property in France for holidays can become liable for income tax on the assessed benefits in kind. Taking professional advice is essential. An SCI has to produce company accounts each year which must be submitted to the relevant authorities.
Capital gains tax
Capital gains tax only applies in the case of the sale of a secondary residence. There is no capital gains tax incurred in the sale of a main home to buy another. Calculating any tax due on the re-sale of a property is complicated and professional advice should be sought. The tax is applied to the difference between the sale price and that of the original purchase price plus the transaction costs, plus any work done by professionals on the property. In other words - the gain.
It is important to keep all receipts of work done on the property for the capital gains tax but also for the guarantees.
Individuals resident in France on 1 January of any year, and non-residents who have assets in France, are taxed on the basis of their assets as at 1 January each year. Wealth tax only affects those with assets over a certain rate and is calculated in bands above that figure.
- To find out the current rate of wealth tax in France see the French Government Tax office website
Property Trade Associations
The more significant trade associations representing the Estate Agents in France are:
- FNAIM (Fédération Nationale des Agents Immobiliers)
- UNIS (Union des Syndicats de l'Immobilier)
- SNPI (Syndicat National des Professionnels Immobiliers)
- CNAB (Confédération Nationale des Administrateurs de Biens)
With information by Carole Bayliss Copyright © Carole & Tony Bayliss All Rights Reserved 2014 Updates and additions by Joan Jenkins, Gérante (Managing Director) ACTOUS IMMOBILIER SARL, 8 Grand Rue - 16240 Villefagnan Agence (Office) 05 45 85 37 37 / Portable (Mobile) 06 74 93 53 57