Macron will Introduce his Property Tax Reforms next year
The government has confirmed that Emmanuel Macron’s two key property tax reform measures will figure in the state budget bill for 2018. What do they mean for homeowners in France?
In a move emblematic of his centrist approach, Emmanuel Macron campaigned to exonerate 80% of households from the taxe d’habitation while also promising that the ISF (wealth tax) would become a ‘tax on property wealth’. A move that shored up support from struggling households while raising eyebrows from those with high-value property who fear an increase in their tax liability as part of the move.
It emerged today that the two property tax reforms will form part of Edouard Phillipe’s budget for 2018. The prime minister has previously only gone so far as to say the measure would be implemented by the end of Macron’s first five-year tenure in 2022, implying an introduction date as late as 2019.
Government spokesman Christopher Castaner confirmed the new date, adding that the previously vague declarations were “because not all the details had been ironed out yet.” The finalised timetable was decided by Emmanuel Macron on Sunday afternoon in agreement with the prime minister.
The first measure, that of exonerating four-fifths of households from the taxe d’habitation, will be implemented over three stages to ease the shock to state coffers. Exempting households earnings less than €20,000 euros per year per household individual is estimated to cost ten billion euros in annual revenue to local government.
The measure to reduce the wealth tax to property only will change nothing for foreign property owners, who only pay the tax on their property wealth. The aim is to give a boost to the economy by encouraging investment into ‘mobile’ assets, like investing in companies and buying stocks. Initially, the exemption of these assets from the ISF will cost the government two billion euros a year in tax revenue.
An exoneration for some, a quadrupling for others
Last week, it emerged that the Paris council has included an amendment from the Communist party asking for a quadrupling of the taxe d’habitation surcharge on vacant properties in the capital. The measure will be voted on in October and could see those with property in the capital paying €2500 a year on average if their property is not lived in for more than 184 days a year.
It was only in January that a 60% surcharge was voted in, tripling the 20% one already in place, but recent price growth has prompted more radical measures to be discussed. Also in the bill is a quadrupling of the fine for illegally renting out a property for more than 120 days a year, from €25,000 to €100,000.
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