Author Ayan Ahmed

Blog Taxes for house owners

Ayanahmed1947@gmail.com

Introduction
If you are thinking about purchasing a property in France, whether as a permanent residence or to
enjoy on vacations, you should be aware of the tax implications so that you can plan for them in
advance if feasible. Be especially cautious with investment property and second homes – they are
not considered your primary personal residence, so you frequently lose the primary domestic reliefs.

If you haven't yet purchased your own home, take the time to consider your various ownership
options, as this will affect your heirs' succession tax liabilities as well as who you may leave the
belongings to (France imposes 'pressured heirship' guidelines).

In France, property taxes and fees are extremely complicated. When purchasing an apartment or
villa in a private complex, you must consider various local and national taxes, as well as maintenance
fees. And, of course, French inheritance laws apply to foreign residents as well, so there are
numerous factors to consider when purchasing property in the south of France.

Concept
Property taxes apply to the assets of a person or business. Inheritance and inheritance tax, for
example, are due respectively on the death of a character and the passing of their property to an
heir. Property taxes, however, are paid on a fixed schedule, often annually, at the cost of taxable
assets, including land and houses. Many property taxes are very distorting and greatly complicate
the life of a taxpayer or a business. which affects productivity and production. Financial transaction
taxes increase the price of capital, limiting the flow of financing capital to its greener allocations.
Wealth taxes limit the capital available in the financial system, which hurts long-term economic
growth and innovation. Sound tax coverage minimizes financial distortions. With the exception of
property taxes, most property taxes increase monetary distortions and have a long-term negative
effect on an economic system and its productivity .

France tax residence

If you arrive in France intending to stay indefinitely, you will become a tax resident the day you
arrive. If you plan to spend more than half of your year in France, we recommend paying close
attention to the tax residency regulations so you know where to pay your taxes. You can be
considered a tax resident in France if you meet one of these four criteria: your place of residence,
actual residence in France, or both. France is your closest neighbour; the average number of days in
a calendar year in France is 183. Is your main passion (career) in France, or where do you get your
basic income? The majority of your major assets are located in France. International profits, profits,
and real estate property are all taxed in France. You have no choice; either both of you or you are
not a French tax resident according to the rules. Non-citizens are only taxed in France on profits and
property of French origin.
Wealth tax in France
Remember that France imposes an annual estate tax on real estate known as Impet sur la Fortune
immobiliser (IFI). It only applies to households with taxable items totalling more than 1.3 million.
Then there is a tax-free allowance of $800,000, and the fee begins at zero. Moving to 5% and
increasing by 1.5 percentage points. Residents of France will be taxed on the international real
estate price of their home beginning on January 1 of each year. It applies to all residences - a
principal home fee for property tax purposes can be reduced by up to 30% - whether vacation
homes or investment residences, owned directly or indirectly. Non-resident French are liable for real
estate, including property rights in France.

Capital gains tax in France

In addition to its most important citizens, French citizens are subject to a 19% international real
estate capital gains tax, as well as additional and social taxes (usually 17.2 percent which can be
reduced to 17.2 percent). S1 form holders receive a 7.5 percent discount. For capital gains of more
than 50,000, the rate gradually rises from 2% to 6%; for capital gains of more than € 260.00, the
maximum total value is 42.2 percent. Capital gains tax is deductible beginning in the sixth year and
continuing for the next 22 years, with a full deduction over the life of the property. Social
expenditure will also fall after five years, but it will take 30 years to fully reimburse the expenditure,
with the deficit waived over the last seven years. Your main residence in France is exempt from
capital gains tax for residents, as long as your actual and recurring residence is miles away at the
time of sale. If you encounter favourable conditions, you can take a 12-month break. If you have a
Kingdom Pension or Disability Card, your taxable income in previous tax years was less than a certain
level, and you also have nothing legal. Tax. Liability for property taxes If you use the proceeds to
purchase a major home that you have not owned in the last four years, you will also be eligible for
an exemption for property other than your primary residence. Non-citizens selling French property
are subject to the French capital gains tax in full.

French income tax

If you rent a French business, your net profits will be taxed at a rate ranging from 11 percent (for
profits over €10,084) to 45 percent (for income over €158,122) in 2021, plus 17.2 percent social
charges. The same is true for French citizens who rent property in another country. Because there
are various tax regimes for French rental property, we recommend doing your research and
consulting with an accountant. It should be noted that the special 30 percent constant tax price is
still available. Rental profits are no longer taxed for investment profits.

Different taxes to pay when you buy or sell a property

in France as an owner.
Notary’s fee (frais de notaire)

Notary fees are one of the most important expenses you will incur when purchasing property in
France. Although notary fees may appear to be significant, they cover the majority of the
commissions associated with the sale. The most exciting news is that the notary will usually put in a
lot of effort to jointly secure your invoice. If he goes to the state but wins his appeal because it is the
notary who collects it, he certainly does not keep it to the maximum. The notary's fee is composed
of three elements3: • the actual notary's fee, known as the emoluments charge, which is set by the
State entirely on the basis of the estate's tax bracket, ranging from 0.8 percent to quattrop.C1.
Although it is no longer a tax, you may be required to pay VAT on this rate.
• Customs duties
• VAT (on certain purchases only, see below)
• Additional costs, such as land registration and a notary commission on sales if you did not use a
real estate agent.
This is far from a comprehensive list of all commissions associated with the purchase or promotion
of a property: these are only the major ones that vary according to the notary's tariff. A large
commission will also be charged if you used a real estate agent. There are also numerous other costs
that could be incurred.

Stamp duty (droit de mutation

Transfer duty Stamp duty is a tax on the purchase of housing. In French, we speak of transfer rights.
The rate of stamp duty varies slightly between the departments of France and according to the age
of the property.
• For goods over 5 years old, the stamp duty is 5.8%, even 5.08% in some departments
• For goods under the age of 5 years, the stamp duty is only 0.7% plus 20% VAT. Be sure to check if
the advertised price

Value Added Tax (VAT)

Value added tax, known as IVA in France, is paid on the purchase of new homes but not on older
properties¹. There is also TVA to pay on the émoluments fee that goes to the notary

PROPERTY LAWS IN FRANCE

(French Succession Laws/ Droit de succession)
French inheritance laws are very specific and apply to all property owners, whether they are French
citizens or non-residents. New EU rules were enacted in August 2015 to allow EU citizens to choose
whether or not to apply inheritance laws in their place of residence or birth. However, before
casualties can be used on your property, you must make this decision; otherwise, they will follow
French legal inheritance guidelines. Children are considered heirs under French inheritance law and
are legally entitled to your property. The spouse or guardian, on the other hand, has no such
protection and can be ignored or ignored in the case of inheritance. Even if your children inherit your
home, you can claim that your spouse has what is known as interest in it, and they have the right to
live in it until your death. And your children cannot afford to have this right granted to them. If you
have children, a portion of your assets, known as "reserves," may be automatically distributed to
them after your death. The 'available portion' of your estate exemption can be divided among your
family members. For your needs, we recommend that you consult with your notary, who can advise
you on a satisfactory path in heir administration. You must do this before signing the sales bill, but it
is nearly impossible to change it once it has been officially registered.

What are the taxes on property in France?

Tax on Transfers
You pay the notary for the condo purchase fee on that day, but you also pay an additional tax: the
transfer tax. These charges, which are primarily related to the public treasury, are calculated based
on the type of goods, their area and characteristics, as well as your financing strategy. In general, the
transfer price for an old property is 7.5 percent of the sale price; however, the transfer costs for a
new property are 3 percent. If the first resale occurs within 5 years, the same rate applies to Offline
homes.

Property taxation
You will be subject to assets tax once you become a home-owner. Indeed, when you sign the deed of
sale with your notary, you will pay it on a pro rata basis for the current year, then yearly to the tax
authorities. This is a local tax levied by the commune or department. This tax is made up of the
family waste tax, which is levied directly on the tenant.

Tax on housing
The Housing tax is also a neighbourhood tax that is levied on the commune. It is due in full on
January 1st for the calendar year by the occupant of the dwelling. It is made up of a contribution to
public broadcasting. Since 2018, a brand new system has been in place to gradually phase out the
payment of this tax by eighty percent of the population. Depending on your way of life or the state
of your assets, you may already be eligible for a reduction or remedy.

Possibilities for deductions

On presentation of supporting documentation, it is possible to reduce the total amount of the

transfer fees by deducting the cost of the furnishings, such as a kitchen appliance. However, be
cautious because deducting organisation costs has now been identified as tax evasion!

Property Tax (Taxe Foncière )

This is paid to the French owners. You have an obligation to pay it as the owner, whether you live in
your property or rent it out. The property tax in France is the more expensive of the two. The price
of this, like the UK tourist tax, varies according to the location of the personal effects, in addition to
the cadastral cost of the personal effects. The amount of property tax is set by the commune, and
some areas are much more expensive than others. "Valeur Locative Cadestrale" (or in English, the
value of the fictitious co-ownership). The expected rent that the goods could obtain on the free
market price of the property tax is then commonly calculated by dividing this amount by two. The
owner is responsible for keeping track of all updates, additions to the property, and so on. Property
modifications, such as the addition of a swimming pool or the conversion of the assets' use (for
example, to gite), will affect the amount of property tax. These apartment values were originally
recalculated in the 1970s and are slowly being updated across France in 2018, implying that the
amount of property tax due for many properties may increase. Property tax is usually due in
October, and the date by which the price is to be calculated is usually stated on the form that you
receive in the rent, which is usually in September, though you can choose to pay the tax due in
months other than September. When purchasing your French property, it is critical to allow the tax
specialists to understand, as the first invoice may be mailed to your previous or different address
(i.e. English address) and if you do not receive the notification in time to meet the commission
closing date, you may be penalised for late payment.

Housing Tax (Taxe d’habitation )

This is paid by the property's tenant, whether the owner or a long-term tenant. Thus, if you own a
large portion of the assets but rent them out, you are responsible for the property tax but not the
housing tax. You must pay the council tax if you are a tenant. It's worth noting that the residence tax
is made up of the TV licence fee, so if you don't have one, let them know and it will most likely be
deducted from your bill zone by zone. Towns and villages, in general, can be more expensive than
villages or rural houses. Every year in November, this tax is due. If a tenant fails to pay for any
reason, they may receive a first class of 10 based on the centime of the tax due through the
neighbouring authority, and if they refuse to pay, French law allows the administration tax to
immediately withdraw the money from his financial account. account of the institution, and they
also have the authority to "block" their bank account via the Banque de France! So, if you're thinking
about renting a property, you're in good hands because tenants rarely need to threaten such legal
action anymore! Also, keep in mind that if you rent out your property, you must pay the CET tax
(Territorial Economic Contribution). It is due in December of each year and can also be paid monthly.
You may benefit from the French government's plans to phase out the council tax, which began in
January 2018, depending on your purchase of a property in France and your non-public debts. The
first-year 30% reduction applies to singles with net taxable income of less than €27.00 and couples
with taxable income of less than €43,000. This sum is increased by €6,000 for each additional
dependent family member. This can be seen as a 65 percent reduction in line with the cent in 2019
and a 100 percent reduction in 2020.

Exemptions in France 
Some properties are subject to tax breaks and exemptions. Some new constructions, for example,
may be exempt from all taxes for the first two years. To take advantage of this discount, you must
apply to the government. Certain French homes in conservation or deemed uninhabitable may also
be eligible for tax breaks or exemptions (these are normally people with no related offers and no
furniture). There is also a reduced property tax rate for people over the age of 75 (if on a low
income), people with disabilities, and university students who ensure the property is their primary
residence. Furthermore, those over the age of 60 may be completely exempt from housing tax if
they are no longer eligible for wealth tax and have low incomes. These reductions, however, will
only apply if you have filed a tax return in France while keeping your income. You should first inquire
about one of these reductions with your local tax office – (Center des Impôts Fonciers) or Bureau de
Catastrophe. If you are considering purchasing an asset in France, you should be aware of the typical
costs of owning a French asset. You should be aware that as a landlord in France, you now pay two
types of tourist taxes (one of which includes your TV licence!). In France, the two members of
belonging are the property tax and the housing tax," despite the latter's exercise regularly raising
through 2020 for most families.

Conclusion
The maximum form of detention specific to the acquisition of personal effects in France depends on
each particular case. At all times, a potential French real estate client should seek a competent
criminal recommendation. In addition, we must remember: the effect of the French ISF, a way to
avoid being resident in France and to worry about French tax on profits, do you need a will to get rid
of property and what advantages the convention can observe. With the brand new tax regime, US
citizens can now transfer their real estate in France to their tax-exempt surviving spouse, knowing
that inheritance tax will still be due on the part that goes to their children or other heirs. right.
However, by paying €150,000 to each of their children every six years, mum and dad can significantly
limit their child's liability to French property tax.

Reference
https://www.connexionfrance.com/Practical/Second-Homes/French-second-home-owners-capital-
gains-tax-cut-explained

https://www.taxinnovations.com/french-to-tax-second-holiday-home-owners/

https://en.wikipedia.org/wiki/Land_value_tax

https://www.buckles-law.co.uk/blog/france/french-capital-gains-tax-on-sale-how-is-it-affected-by-
brexit-for-uk-residents/

https://www.euraxess.fr/france/information-assistance/taxation