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You might have received your “taxe d’habitation” statement from the French tax authorities. As usual, you are a bit lost and you do not really understand how the tax is calculated. In this post we will attempt to explain simply and clearly how to read the tax role and to decipher the underlying calculation.
Let’s remind briefly when and which case you have to pay this local tax. As long as you own a home in France, and there is some basic furniture in it, you have to pay the “taxe d’habitation”, even if you do not use the property, or if you use it only for a few days or weeks every year. If you have an all-year-round tenant and the tenant has had a tenancy agreement at the 1st of January, then the “taxe d’habitation” is paid by your tenant. However, if you rent out your property a few weeks or a few months for holiday makers, you will have to pay the tax as a presumption that you may use the property when it is not rented out. If your property is completely unfurnished at the 1st of January, you do not pay the tax, however you may be liable to pay the “taxe sur les logements vacants” (TLV) after a few years (we will write a separate post on the TLV). As the tax is calculated for the whole year based on your situation on 1st of January, even if you sell your property during the year, you still have to pay the tax for the whole year.
Generally, you have to pay the “taxe d’habitation” before the 15th of November (20th if you pay online). However in some “communes” you might have untill the 15th of December. You need to check the deadline on your tax notice.
Hereunder there is a sample of “taxe d’habitation” form with some data. The post uses the example to explain the calculation and to help you to read your own tax form.
The 4 round numbers in green are the main inputs in this tax form:
- Number 1):“valeur locative brute” this is the “gross” rental value established by the land registry in the 1970ies and updated as per the inflation rate since then (therefore it can be very different to the “market” rental value) see our post “taxe fonciere and taxe d’habitationn calculation in 41 cities”
- Number 2): “valeur locative moyenne” is the average rental value within each local council (“commune”…), it is used to calculate the tax allowances
- Number 3) and 4) are allowance rates (“abatements”), applied to the average rental value. The calculated amount is deducted from the (gross) rental value, this is only for main residency.
1/ Tax calculation If your property is a second home:
A second home means that your property is not your main residency in France, as recognised by the tax authorities. For a second home, you cannot benefit from any allowance at all. The tax is based on the rental value “valeur locative brute”. Your tax would be the rental value multiplied by each local authority’s tax rate. They are 4 different tax rates. One for the “commune” or town hall, one for the “syndicat de communes” and one for “intercommunalité”( 2 different types of group of “communes”), one for the “taxe spéciale d’équipement” (tax for local authorities’ owned company in charge of town planning). So the tax for a second home would be: 10 574 * (21.32% + 1.25% + 0.413% + 0.445%) = 2 477 Euros (would appear on the line “total des cotisations”), additionally, the French state charges 4.5% of the tax due to the local authorities, for managing the tax on behalf of the local authorities: 2 477 * 4.5% = 111 Euros (would be on the line “frais de gestions”). Finally, for a second home with a rental value above 4573 Euros there is an additional 1.2% tax, and 1.7% above 7622 Euros (it would be on the line “prélèvement sur residences secondaires”. In this case it would be: 10 574 * 1.7% = 179 Euros. Overall the total tax amounts to: 2477+111+179 = 2 767 Euros. In this example the rental value (which is not the “market rental value”) is particularly high, implying a rather large second home, in most case your tax should be significantly lower
2/ Tax allowances for the main residency:
Compulsory tax allowance:
Tax allowance for “dependants” (under the heading “Personne(s) à charge”):
- 10 % (of the average rental value) for each of the first 2 dependant persons (e.g. the first 2 children), (on the line “par personne rang 1 ou 2 pour personne (s)”)
- 15% for the each of the additional dependant (e.g. from the third children), (on the line “pour personne rang 3 ou + pour personne (s)”).
The local authorities may decide to increase the allowance rate (however they cannot exceed a ceiling by law). When the parents are divorced, the rate for each child is divided by 2 and allocated to each parent. Dependants in 2013 are: children taken into account for the income tax in 2012, your -and your partner’s- ascendants more than 70 years old, living with you, and who earn less than a revenue threshold.
Discretionary tax allowances:
Local councils may choose to grant additional tax allowances:
- General allowance for all tax payers (the rate is on the line Abatement “général à la base”). The local council may vote an allowance rate between 1 and 15% of the average rental value.
- Allowance for taxpayers with low income. (on the line “spécial à la base”). The local council may vote an allowance rate up to 15% of the average rental value. The tax payers should have low income below a certain threshold, and live in a home with a rental value below 130% of the average rental value (this percentage is increased for each additional “dependants”)
- Allowance for disabled taxpayers (on the line “spécial handicapé”), 10% of the average rental value*.
3/ Tax calculation for the main residency:
In the above example, the taxpayer has 3 dependants in his home. There is the compulsory allowance for the 1st two dependants (10% rate) and for the 3rd dependant (15% rate). Also the council grant a 10% allowance for disability and we assume that the taxpayer is a disable person or live with a disable person fulfilling the requirement for the allowance.
The allowances are based on the “average rental value”, therefore 5 633 Euros in this case:
· Allowance for the 1st two dependants: 10% *2 * 5633 = 1127 Euros
· Allowance for the 3rd dependant: 15% * 5633 = 845 Euros
· Allowance for disability : 10% * 5633 = 563 Euros
Then the allowances are deducted from the “gross” rental value (“valeur locative brute”) which in this case is 10 574 Euros:
10 574 – 1127 -845-563 = 8 040 Euros
The result , 8 040 Euros, (“base nette d’imposition”) is the amount on which the local authorities’ tax rates are applied. This is now the same calculation as above for a second home:
8 040 * (21.32% + 1.25% + 0.413% + 0.445%) = 1 883 Euros (on the line “total des cotisations”)
Then the French state charges 1% (as a reminder it is 4.5% for a second home!) of management fees.
1 883 * 1% = 18 Euros (rounded to the lower euro, the document discloses 28 Euros, this is obviously a mistake).
There is also an additional tax, 0.2% of the net rental value (“base nette d’imposition”) for property with a gross rental value above 4573 Euros. The tax should appear on the line “prélèvement pour base élevée”
8040 * 0.2% = 16 Euros
So the total tax is : 1883 + 18 + 12 = 1913 Euros on the line “Montant de votre impôt”
4/ Warning when buying a home in France:
Before buying a second home in France, you should ask the sellers what is the amount of “taxe d’habitation” and “taxe fonciere” as they may vary significantly from one local council to another. You should ask for the tax notice (“avis d’imposition” in French). If your acquisition is a second home, and the seller occupies the property as his main residency, be careful with the amount of “taxe d’habitation” that he will disclose to you. The seller probably benefit from tax allowances that you would not benefit as a owner of the same property (as a “second home” instead of a “main residency”). Therefore you need to recalculate the tax, based on the gross rental value (“valeur locative brute”) as explain in the paragraph “1/ Tax calculation if your property is a second home”.
Inversely, if you buy a property which is a second home for the seller and you intend to make it your main residency, you will likely pay less “taxe d’habitation” as depending on your situation you may benefit from one or several of the tax allowances.
*Allowance for disabled taxpayers :
The taxpayers should be in one of the following case:
o Benefit from the « allocation supplémentaire d’invalidité (ASI)”
o Benefit the « allocation aux adultes handicapés »
o Holder of a « carte d’invalidité »
o A disability which does not allow a sufficient working income to sustain a living
o Live with someone in the above situation
o You should also fill in a special tax form “cerfa 13573*01” before the 31st of December of the preceding year