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PROPERTY

Why French homeowners face higher property taxes in 2023

As the 2022 deadline to pay property taxes in France approaches, homeowners will likely have to face higher property taxes in 2023.

If you are a homeowner in France, you may want to consider putting some money aside as property taxes could increase significantly next year. 

The taxe foncière – a property ownership tax levied at local level – is a tax paid by all property owners in France. It is separate to the taxe d’habitation, which is paid by whoever occupies the property (whether they are an owner or a tenant) and applies to anyone who owns a building or land. The latter is being progressively phased out.

Why the possible increases?

A large reason property ownership taxes may increase in 2023 is due to the fact that property values are reevaluated each year in November according to inflation and other factors that have changed the value of the property such as home extensions or new swimming pools. 

In general, the rate of taxe foncière has increased in France in recent years is due to gradual scrapping of another property tax, taxe d’habitation that left local authorities short of cash.

Why did my bill go up for 2022 and what’s the deal for 2023?

For 2022, property tax payments are due on October 15th or 20th, depending on payment method. Many French homeowners were already met with an unpleasant surprise when they received their tax notices this year.

The revaluation to reflect inflation allowed for a 3.4 percent increase in 2022, which increased the property tax on all homeowners. Additionally, municipalities voted to increase local taxes. In Marseille, rates went up by 13.1 percent, for Tours it was 11.6 percent and Pau saw a rise of 10 percent. 

In 2023, these values could be even higher.

Theoretically, property values across France ought to be reevaluated to reflect skyrocketing inflation, which would lead to an increase of 7 percent (in comparison to the 3.4 percent rise that was seen in 2022). In June, the French Finance Minister Bruno Le Maire assured property-owners that this issue had been identified and that the government was considering capping the rate.

However, according to reporting by French daily Le Parisien, several senior officials have indicated that “no capped rate for the taxe foncière will be included in the finance bill to be presented in late September.”

READ MORE: Reader question: How can I challenge my French tax bill?

In effect, this means that the 2023 budget would allocate for an increase of property taxes by approximately 6.5 to 7 percent – a rise that would impact at least 30 million homeowners in France.

Various suggestions have been put forward aimed at keeping the taxe foncière bills down, such as capping increases to 3.5 percent or linking the the level of government assistance to local authorities to inflation (meaning local authorities would be less inclined to raise taxes).

Nevertheless, as of September 23rd, these solutions had not yet been put into place.

Second home owners to be harder hit

Second-home owners in France have to worry about the taxe d’habitation (residence tax) on top of the taxe foncière.

Even though the former is in the process of being phased out for most French residents – apart from the highest earners, those with second homes are still required to pay it.

And for many of those that do, the rates are going up.

In 2022, more towns have voted to increase it, while others gained the ability to add a surcharge for second-home owners, with French daily Le Parisien reporting that the taxe d’habitation “continues to soar.” 

Municipalities in zones tendues (areas with a housing shortage) have the ability to choose to increase taxe d’habitation by up to 60 percent for second home owners.

READ MORE: Tax hikes of up to 60% for French second home owners

From 2023, several new areas – including Nantes – will join the list of zones tendues, meaning they will be able to vote to increase taxes for second-home owners.

In 2022, large cities such as Bordeaux, Lyon, Biarritz, Arles and Saint-Jean-de-Luz saw their city councils vote to increase the tax at the maximum 60 percent.

How is taxe foncière calculated generally?

The formula is complicated, and it is calculated each year for you by your local authority (though under the auspices of a formula set by the French finance ministry). Basically, it has to do with the rentable value of your property divided by two and then multiplied by the tax level set by your local authority.

READ ALSO: Taxe foncière: What is the French property tax and do I have to pay it?

The local authority’s tax rate varies hugely from place to place, which is why two people with similar sized homes in different areas can end up with wildly different bills.

In fact to make it more complicated it’s actually three local authorities – the commune, the département and the région – which all set their own tax rates then divide up your tax to pay for local services.

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PROPERTY

Bail mobilité: How France’s short-term rental contracts work

If you're after a short-term rental in France you might be offered a 'bail mobilité' (mobility lease) - here's how these work and whether they're a good deal.

Bail mobilité: How France's short-term rental contracts work

The bail mobilité is a relatively recent invention in France. It was created by the Elan law in 2018 and is a rental contract intended for people who have a temporary need for housing due to their professional activity – whether that be a work transfer, temporary posting, or status as a student. 

In order to qualify, the tenant must show proof that at the beginning of the lease they are in one of the following approved situations: enrolled in professional training or higher education, completing an apprenticeship or internship, on a temporary posting or having received a work transfer, or working as a volunteer as “part of a civic service.”

You can find more specific information about these situations on the French government website HERE

This essentially means that if you are visiting France for an extended period of time for tourism purposes, you likely would not be able to rent using a bail mobilité. This might be a source of confusion for those who see these lease arrangements advertised on websites such as Airbnb (more on this below). 

There are some rules that lodgings listed as “mobility leases” must follow. They must always be furnished rentals – meaning they are required to provide the tenant with specific items such as bedding, dishes, and other things. You can learn more HERE.

READ MORE: Renting property in France: Should I go for furnished or unfurnished?

Next, the lease itself must be between one to ten months. It cannot exceed ten months. Additionally, mobility leases cannot be renewed. If the tenant and landlord want to renew the rental, it will have to be within the context of a standard furnished rental contract.

With a mobility lease, the owner is not allowed to ask the renter for a security deposit (dépôt de garantie). However, they do have the right to request a guarantor (un garant, or sometimes referred to as a caution). 

In terms of the actual lease itself, it must include certain documents, similar to a standard furnished rental contract. The lease must include an inventory of fixtures (état des lieux), the technical diagnostic file (this includes the energy rating, for example), and if the property is located in a condominium or apartment building, then the regulations concerning common areas. 

The tenant retains the right to move out at any time during the lease – as long as they give one month’s notice to the owner (or the real estate company if the accommodation is managed by an agency). Typically, this is done via registered letter (lettre recommandée) with acknowledgement of receipt.

On the other hand, the landlord cannot terminate the lease before the end date (unless the tenant does not respect their obligations, such as paying rent). 

When it comes to determining the rental price of a dwelling listed under a bail mobilité, the landlord can set the rent by their own standards, as long as the lodging is not located in a zone tendue (housing shortage area) and therefore is not bound by local rent caps. However, rent cannot be revised during the lease and it should be listed within the rental contract.

Finally, if the property is being rented to more than one person (a colocation), the lease cannot require the roomates to have a “solidarity clause.” This is a part of the lease that would outline the requirement of the co-tenant(s) to pay the rents even if another co-tenant gives notice and moves out. Typically, this would also outline when that expectation for the other tenant(s) to cover remaining rents would end. 

Common questions about mobility leases

First, the bail mobilité is often confused with the “secondary-residence lease.” The two differ primarily due to the fact that a mobility lease can constitute a primary residence, depending on the duration of the lease.

The next common question regarding mobility leases is whether it is possible to rent one via an online rental platform, such as Airbnb. The short answer is – yes. However, as mentioned before, the bail mobilité is only available to specific groups of people.

Renting with a mobility lease absolves the requirement to pay the ‘tourist tax’ (taxe de séjour) in certain cities – as it is a residential lease and not a tourist accommodation. The tourist tax is automatically added to Airbnb charges, but in certain French cities such as Paris, Lyon, Bordeaux, Toulouse, Nantes, Lille Nice, Strasbourg, and Marseille, booking with a mobility lease automatically exempts the renter form paying the tourist tax. 

READ MORE: What are the rules on renting out French property on Airbnb?

In other parts of France, people signing mobility leases via Airbnb may be charged a tourist tax, but this can be refunded by request at the local town hall. 

Additionally, renting a property under a mobility lease exempts the owner from having to do a “change of use” declaration with the town hall, as the property will technically continue being used as residential accommodation, rather than touristic. This authorisation is mandatory for furnished tourist accommodation in many French cities.

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