Property tax costs likely to rise sharply for Irish with second homes in France

La belle vie à la française looks like it’s going to get a little bit more expensive after French president Emmanuel Macron passed a motion to allow a greater number of local councils to increase their property taxes by as much as 60 per cent on second homes.

The move means that Irish homeowners with second homes in France could face a sharp increase in their property tax costs – and any rugby supporters travelling to the country over the next few weeks, may need to think twice about a permanent déplacement should they be bewitched by the (cheaper) wine and food on offer.

The increase in taxes comes against a background of increasing tensions due to a lack of housing supply and a growing number of people with two homes, with the tax seen as a disincentive to those considering buying a holiday home. It’s a particular issue in seaside resorts; in Brittany for example, where about one in 10 of all homes are second homes, more than 150 local councils have been given permission to apply the surcharge.

Until this year, all property owners faced a “taxe d’habitation”, a type of local property tax. However, it was amended earlier this year to apply only to those with second homes, while last month, it was announced that rather than keeping the surcharge limited to about 1,000 councils – typically those in urban/seaside areas – it has been extended to a further 2,263, bringing far more homes – and their owners – into the tax surcharge net.

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This surcharge can now be applied at a rate of between 5-60 per cent, at the request of the local council.

“The increase in the property tax is meant to cover inflation, which in France rose to 5.2 per cent last year. However, a potential 60 per cent rise far outpaces this. In Paris, for example, the city council has decided on a 51.9 per cent rise,” says Alina Moroianu, of Property Tax International, a sister company of Taxback.com.

Other cities, such as Lyon and Bordeaux, have all applied the highest rate possible, of 60 per cent, while seaside resorts, such as Saint Jean de Luz and Biarritz in the Basque region, and Nice and Antibes along the Cote d’Azur have also gone for increases of up to 60 per cent.

Now a whole new raft of local councils will get the option to increase taxes to drive up their revenues.

The average taxe d’habitation last year was €772 for a house, and €941 for a flat. If the full increase is applied, it would push the average cost up to more than €1,200

In addition, French property owners will also see an increase in property tax, or taxe foncière, which applies to all properties, as this has been increased by 7.1 per cent, while some regions will have an even higher increase.

“Any Irish owner of a property in France will be impacted by this,” says Moroianu, adding that this is the largest yearly jump of the tax since 1986.