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Exemption for new homes (compulsory exemption):
Owners of new homes are exempted to pay the “taxe foncière” for 2 years following the completion of the building. The exemption applies for second homes and main homes (main residency). The official date of the completion is characterised in France by a formal statement*. However, the tax authorities consider that a building is completed as soon as the work progress allows an effective use of the building, even if there are still internal works to carry out. The home owner has to send a specific form (H1 for a house, H2 for a flat) to the “centre des impôts fonciers” of the property location. The form must be sent within 90 days of the building’s completion date. The exemption is valid for the 1st of January of the two following years. Examples:
- your home’s achievement date is the 17th of November 2013, you will be exempted for the situation as of the 1st of January 2014 and 2015, therefore you will not pay any taxe foncière in 2014 and 2015.
- If you are lucky so that your home is achieved on the 20th of January 2014, you will not pay any tax in 2015 and 2016 (2014 does not count as your home was not completed at the 1st of January 2014).
- ·Warning: If you do not send the form within the 90 days you will lose part or all of the tax exemption, e.g.: if your home is completed the 3rd of March 2014, the 90 days time lag expires the 1st of June 2014. If you deliver the form to the tax authorities on the 15th of June you will lose the exemption for 2015, however you will still be exempted for 2016. If you deliver the form on the 4th of January 2015, you will lose the tax exemption for both years.
- If you buy a new home after its completion date (and you are the first buyer after it has been completed), the 90 days period counts from the day you buy the property (date of the “acte de vente” or final acquisition contract) if the developer did not fill in the form at completion date.
If you build an extension, or a swimming pool they will be tax exempted for 2 years in the same way.
Exemption for new or refurbished homes with high standard of energy performance (discretionary exemption):
Each of the three local councils (“communes”, group of “communes”, “departments”)** of the property location, may decide a 50 to 100% exemption of the taxe foncière for:
- New homes built after the 1st of January 2009 abiding by the “BBC” energy standard (“Bâtiment Basse Consommation”)
o The 50 to 100% exemption lasts for at least 5 years following the completion date, as new homes obligatory benefit from a 2 years exemption after completion, the 5 years add up to the 2 years. The exemption should be required before the 1st of January of the first exempted year.
o E.g.: you buy a “BBC” new home completed on the 5th of February 2013. You apply for the 2 years compulsory exemption within 90 days. Then, before the 1st of January 2016, you apply for the 5 years additional exemption (partial or total).
- Refurbished homes, for which energy performance works have been completed in the following case:
o The home was originally completed before the 1st of January 1989
o The landlord has made building expenses which entitle to the “credit d’impôt en faveur du developpement durable” (Tax credit for sustainable development) and exceed:
§ Either € 10,000 per housing during the year preceding the application of the exemption
§ Or € 15,000 per housing during the 3 years preceding the application of the exemption
o However, to be entitle to the tax credit, and therefore the “taxe fonciere” exemption, you have to be tax resident in France and pay your income tax in France (unless you buy a home which has already undergone the refurbishment within the past 5 years, in this case you should continue to benefit from the tax exemption up to the 5 years term, however it is better to check at the “mairie”)
To benefit from these two tax exemptions, you have to contact the tax authorities (“centre des impôts fonciers”) of the property location before the 1st of January of the first year for which the exemption is applied. You have to send a statement containing all the elements of identification, including the date of completion of housing. For the second exemption case the statement should include all evidence supporting the nature of expenditures and their amounts and the entitlement of the tax credit.
In order to know whether your property may benefit from one of the two “discretionary” exemption, the best is to get in touch with the town hall (the “mairie”) which should be able to advise you about exemptions voted by the local councils.
*(“declaration d’achèvement des travaux et de conformité” DAACT, signed by the holder of the planning permission and the architect)
** Read our post “Taxe fonciere: calculation, payment, deadlines, claims”