Understanding the Two Pillars of French Property Tax: Taxe d’Habitation and Taxe Foncière

Diving into the world of French real estate can feel akin to navigating a maze—especially when it comes to understanding the intricacies of property taxes. In the French taxation system, two key property-related levies you need to acquaint yourself with are the Taxe d’Habitation and the Taxe Foncière. 

These levies can have significant implications on your overall property cost and annual budgeting. This guide is designed to demystify these taxes, providing you with a comprehensive understanding of how they are calculated, who is liable to pay them, and how they impact your investment in French property.

The Taxe d’Habitation, akin to the council tax in the UK or the property tax in the US, is a residence tax that applies to both owners and tenants. On the other hand, the Taxe Foncière, or land tax, is levied on property owners alone, regardless of whether the property is rented out or not. Both of these taxes vary depending on the property’s location, size, and condition, among other factors.

This guide aims to provide clarity around these two crucial aspects of French property ownership. Whether you’re a seasoned investor in the French real estate market or a novice looking to buy your first property in the country, understanding these taxes can play a pivotal role in making an informed decision. 

From explaining the basics to delving into the nuances of exemptions and reductions, this guide is a one-stop resource for all things related to Taxe d’Habitation and Taxe Foncière.

Making Sense of French Property Taxes

1. Overview of French Property Taxes

In France, there are two main property taxes levied on residential properties: Taxe d’Habitation and Taxe Foncière. Local authorities collect both taxes and contribute to the funding of local services and amenities such as schools, waste disposal, and public transport. While both taxes relate to property ownership, they differ in terms of who is liable for payment and how they are calculated.

2. Taxe d’Habitation: Liability and Calculation

Taxe d’Habitation is a residence tax applicable to both renters and homeowners living in a property as their primary residence or using it as a secondary home.

• Liability: The individual occupying the property on the 1st of January each year is liable for the Taxe d’Habitation, whether they are the owner, tenant, or even occupying the property rent-free.
• Calculation: The amount of Taxe d’Habitation payable is determined by the property’s rental value, the local tax rate set by the local authorities, and the occupant’s income. Concessions or exemptions may apply for low-income households, elderly or disabled residents, or in cases where the property is unoccupied on January 1st.

3. Taxe Foncière: Liability and Calculation

Taxe Foncière encompasses two separate taxes—Taxe Foncière sur les Propriétés Bâties (for built properties) and Taxe Foncière sur les Propriétés Non Bâties (for undeveloped land). This section will focus on Taxe Foncière sur les Propriétés Bâties, which is applicable to homeowners.

• Liability: The property owner, rather than the occupier, is liable for the payment of Taxe Foncière, regardless of whether the property is their primary residence, a secondary home, or rented out to tenants.
• Calculation: Taxe Foncière is calculated based on the property’s cadastral income (revenue cadastrale), determined by the local tax office. This value is then multiplied by the local tax rate set by the local authorities. The cadastral income is subject to periodic reassessments to ensure it reflects the property’s current rental value.

4. Navigating French Property Tax Deadlines

Paying your property taxes on time is crucial to avoiding late fees or other penalties. It is important to be aware of the payment deadlines for both Taxe d’Habitation and Taxe Foncière.

• Taxe d’Habitation: Payment for Taxe d’Habitation is typically due in October or November, though deadlines may vary by location. Payment can be made online, by direct debit, or at your local tax office.
• Taxe Foncière: The payment deadline for Taxe Foncière is usually in mid-October, with exact dates varying each year. Similar to Taxe d’Habitation, payments can be made online, by direct debit, or in person.

5. Exemptions and Concessions for French Property Taxes

For both Taxe d’Habitation and Taxe Foncière, certain concessions or exemptions may apply to eligible taxpayers.

• Taxe d’Habitation Exemptions: As of 2021, around 80% of French households have been exempted from Taxe d’Habitation for their primary residence. This change has been implemented with a view to phasing out Taxe d’Habitation for primary residences by 2023.
• Taxe Foncière Exemptions: Exemptions from Taxe Foncière may apply for specific situations, such as new energy-efficient housing or properties undergoing major renovation. These exemptions are typically granted for a limited period.

Trust French Connections HCB to Ensure Compliance with Your French Property Tax Obligations

While the intricacies of French property taxes may seem overwhelming, a solid understanding of the basics can go a long way in helping you navigate this aspect of French life. Whether you’re a property owner, a renter, or someone considering investing in French property, knowing the ins and outs of Taxe d’Habitation and Taxe Foncière can help you make informed decisions and potentially save you money. Remember, when in doubt, it’s always wise to seek professional advice to ensure you’re meeting your tax obligations correctly.

By partnering with French Connections HCB, you can alleviate the stress of managing your French property taxes and focus on enjoying the many rewards of life in France. Discover how we can help you better understand your residency in France and manage your property taxes. Connect with us to get started!