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Money Matters and Legal / In Law

The City of Paris seeks to increase tax on second homes

house front Paris

Paris officials want to instate a fivefold increase on occupancy tax on vacant secondary residences to encourage owners to sell their properties or rent them out.

Last month, the City of Paris voted in the principle of increasing the occupancy tax — taxe d’habitation ­— on vacant second homes in the capital. The tax would be raised from its current rate of 20% to 100%, a fivefold increase. It is estimated that this move would affect over 90,000 secondary residences in Paris.

The tax was already subject to an increase in 2015, hiked up to 20% in “tense” areas of France were housing is deemed in short supply. Over the year 2015, the measure brought in 21 million euros to the state. This subsequent increase could generate an additional 70 million euros.

According to Jacques Baudrier of the French Communist Party — who carried the measure — the main objective of this tax increase is to “encourage owners to rent or sell their properties so that they may be inhabited.” He adds that most of these second homes are located in the capital’s chicest residential districts, between the 1st and the 8th arrondissements.

Considering the high desirability of these neighborhoods for tourists and visitors to the capital, the Nouvel Obs believes this new measure will push homeowners to advertise their properties on rental sites such as Airbnb, despite the City being intent on curbing the short-term rental phenomenon.

Aside from Paris, this increase would also apply to other areas in France, such as the French Riviera and the Basque coast, among others. Previously the move to hike up the tax on second homes to 20% had been applied by only 98 municipalities and cities — including Paris, as well as Toulouse, Nantes and Montpellier — out of the 1,200 that were authorized to do so.

At this time the surcharge was already a controversial move, but the Mayor of Paris, Anne Hidalgo, considered that the 20% rate was not a sufficient enough incentive for owners to “free up” their vacant homes.

Certain owners have the possibility of avoiding the surcharge on a case-by-case basis. This exemption would only apply to people forced to reside in a place separate from their principal residence — when the property in question is near their place of work for instance, or for elderly people residing in retirement homes, for instance.

Photo credit: Wikimedia / Mossot

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