5. French Property Taxes on Rental Properties
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Furnished Lettings
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Unfurnished Lettings
5.1. Furnished Lettings
There are three local property taxes/rates for which a landlord of a furnished letting may be liable:
- Property Ownership Tax - Taxe Foncière.
- Local Business Rates - Contribution Economique Territoriale (CET).
- Residence Tax - Taxe d'Habitation.
In addition, landlords of tourist accommodation (hotels, chambre d'hôtes, camping and caravan sites) are also required to apply to their rates a taxe de séjour, which is payable by their guests. The decision to levy the tax within each commune is at the discretion of each local council. You can read more at France's Holiday Accommodation Tax.
5.1.1. Property Ownership Tax
All property owners pay the taxe foncière, as this is a tax payable on the ownership of property.
However, owners of a chambre d’hôte or meublé de tourisme in rural development areas (Zones de Revitalisation Rurale - ZRR) are able to claim exemption from the tax, subject to a general decision of the local council not to exempt such properties. Most councils grant exemption, but you need to check with them.
You need to make application by submitting each year Form 6671-D-SD/Cerfa n° 15532 to your local tax office before 31 Dec. The application can also be made on-line through your account.
The exemption is only for that part of the accommodation that is used exclusively for letting purposes.
There is a separate charge for rubbish removal, called the taxe d'enlèvement des ordures ménagères (TEOM), which is normally collected with the taxe foncière. Accordingly, you may need to make separate arrangements for reimbursement of the tax for rubbish removal from your tenant, or accept that this is part of the landlord cost!
Gite owners need to read our Newsletter article Tougher Controls on Rural Gîte Tax Breaks.
5.1.2. Business Rates
As a general rule, if you let out furnished accommodation on a habitual basis, then you are liable for the local business rates (_Cotisation Foncière des Entreprises (CFE) _) on the rental property, although many are exempt.
You do not need to be registered with the authorities as a 'professional landlord' (LMP) to be liable for the business rates.
Even if you employ no-one nor have separate offices the law states: 'Les contribuables qui n’emploient aucun salarié en France et qui n’y disposent d’aucun établissement mais qui y exercent une activité de location d’immeubles ou de vente d’immeubles doivent déposer leurs déclarations au lieu de situation de l’immeuble dont la valeur locative foncière est la plus élevée au 1er janvier de l’année d’imposition.'
Exemptions
Despite the general rule, Article 1459 of the tax code provides for several exemptions from business rates , stating:
Sont exonérés de la cotisation foncière des entreprises :
1° Les propriétaires ou locataires qui louent accidentellement une partie de leur habitation personnelle, lorsque d'ailleurs cette location ne présente aucun caractère périodique ;
2° Les personnes qui louent ou sous-louent en meublé une ou plusieurs pièces de leur habitation principale, sous réserve que les pièces louées constituent pour le locataire ou le sous-locataire en meublé sa résidence principale, et que le prix de location demeure fixé dans des limites raisonnables ;
3° Sauf délibération contraire de la commune ou de l'établissement public de coopération intercommunale doté d'une fiscalité propre :
a) (abrogé)*
b) Les personnes qui louent en meublé des locaux classés dans les conditions prévues à l'article L. 324-1 du code de tourisme, lorsque ces locaux sont compris dans leur habitation personnelle ;
*c) Les personnes autres que celles visées aux 1° et 2° du présent article ainsi qu'au b qui louent ou sous-louent en meublé tout ou partie de leur habitation personnelle. *
Accordingly, there is a permanent, non-qualified exemption in the following cases:
- Where your turnover is less than €5,000 a year;
- Non-periodic lettings of a main or secondary residence are also exempt, provided the owner occupies the property outside the letting period;
- Lodgings let at a reasonable rent as the principal residence of the occupant within the terms set out here.
In addition, subject to no contrary decision of the local council where the property is located also exempt are:
PROVIDED in each case the property is part of their 'habitation personnelle'. That is to say either their main residence or a secondary residence they use when not otherwise let.
Some local councils will exempt both, whilst others only classified accommodation, whilst others grant no exemption.
As a result, you may need to find out from your local council their position on such lettings. What is clear is that unless the property is either your main or secondary residence, you would be liable for the business rates, subject to the national exemptions above.
The law and practice on the local taxes is a little complex because landlords who let on a seasonable basis could potentially be liable for both the taxe d'habitation and business rates (cotisation foncière des entreprises).
To avoid this double imposition, Article 1407 of the tax code states: ne sont pas imposables à la taxe [d’habitation] : 1° Les locaux passibles de la cotisation foncière des entreprises lorsqu'ils ne font pas partie de l'habitation personnelle des contribuables.
Accordingly, where an owner is liable for business rates, they would not pay the taxe d'habitation , provided the property is not part of their habitation personnelle. Where the property is not part of their residence, main or secondary, they pay the business rates, subject to exemptions above. One or other of the taxes is, however, payable, except where the property is let on a permanent basis.
In 2022 some tax offices appear to be adopting a new policy on liability to the taxe d'habitation, as we set out in our news article Gite Owners and the Taxe d'Habitation due to a new interpretation of what constitutes thehabitation personnelle'.
5.1.3. Residence Tax
Since 1st January 2023 the taxe d'habitation has been abolished for all principal residences, so only holiday/second homes now pay the tax.
If you let out your second home on a seasonal basis, then you remain liable for the tax, not the tenant.
Owners of a chambres d’hôte or a meublé de tourisme in rural development areas (Zones de Revitalisation Rurale (ZRR)) are able to claim exemption from the tax, as well as exemption from the taxe fonciere although this is not an automatic right, as a decision as to whether to apply the exemption within any particular ZRR is at the discretion of each local council.
The exoneration also only applies in relation to that part of the property let out to guests. So if you own a property of 200m2, and let out 50m2, the exoneration will only apply to one quarter of the property.
You need to make application by submitting each year Form 1205-GD-SD/Cerfa 13567 to your local tax office before 31 Dec.
If you pay business rates on the same property then you should not also be liable for this tax. Nevertheless, the law does allow the tax authority to impose the tax for those periods when the property is not let and available for your occupation.
The TV licence has been abolished from 2022.
A landlord has certain legal obligations concerning the residence tax when a tenant vacates their property.
In the first instance they are (formally) required to obtain confirmation from an outgoing tenant that they have paid their latest residence tax bill, provided, of course, they were occupying the property on 1st January, and it is their principal home, in line with the rules concerning liability to the tax.
If they do not obtain this confirmation, then within one month of a tenant vacating their property the landlord is required to inform the tax authority that the tenant has quit. This period is increased to three months where the tenant quits without the knowledge of the landlord.
If the landlord does not do so, then they can be made responsible for any residence taxes owed by the tenant, although this is a rule that is very prescribed. Thus, they can only be made liable where the tax authority have started collection procedures and they would not be liable whether they have acted in 'good faith' or the tenant has done a moonlight flit.
5.2. Unfurnished Lettings
The landlord is responsible for the local property rates, the taxe foncière.
No business rates are payable unless the income is over €100K pa.
There is a separate charge for rubbish removal, called the taxe d'enlèvement des ordures ménagères (TEOM), which is normally collected with the taxe foncière. Accordingly, you may need to make separate arrangements for reimbursement of the tax for rubbish removal from your tenant, or accept that this is part of the landlord cost!
Once again, as with furnished lettings above, the landlord is required to undertake the formalities required in relation to a tenant who quits a tenancy.
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