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Tax and other financial obligations for Paris real estate owners

taxes when owning property in France

Building association dues

Apartments in Paris are sold as condominiums, with each owner in the building owning and sharing in a proportional amount of the building expenses.

The amount of the building dues will vary depending on the number of apartments and the relative size of the apartment, as well as the services and amenities of the building: an elevator, a live-in concierge, a courtyard with flowers that need tending, collective water and/or heating are some of the factors that will play into that figure.

The fixed quarterly dues cover insurance, taxes, and the regular maintenance and upkeep of the building amenities, as well as the fees of the management company, the syndic. Any special maintenance – redoing the roof, refurbishing the façade, or adding an elevator – are voted on by the owners and are paid for by special assessments, which are similarly accorded in proportion to your share ownership of the building.

On average, an apartment of about 80m2 will have dues of between 500-900 euros per quarter, or 1500 to 3000 euros per year.

 

Property taxes

There are two types of annual property taxes payable in France: taxe foncière, a property tax payable by the property owner; and taxe d’habitation, payable by the person inhabiting the apartment (a renter or the owner).  If you are an owner-occupant, then you are responsible for paying both of these taxes.

The taxe fonciere is based on the value of the property. In Paris, the annual tax is ordinarily between .1 to .3% of the property price.

The taxe d’habitation depends on the owner’s financial situation, family situation, and rates set by the local government. As such,  it varies by city. For example, a two-child household with a middle-class income paid €444 in taxe d’habitation in Paris in 2010, compared with the €1,162 paid by residents of the heavily-indebted city of Marseilles. Surprising that Paris is about 1/3 the tax of Marseilles.

 

Income tax

If you rent out your Paris property you are required to pay income tax on the income you derive from those rentals. Short term rentals – vacation rentals – in Paris are a hot-button issue in Paris at the moment, as the city government has taken the position that such rentals are not legal unless the apartment is the owner’s primary residence and he rents it out for less than 4 months of the year. Still, all income from rentals should be declared to the French tax authorities and are taxable in France. This is obviously a tricky issue for many owners who still engage in short term rentals; consulting a good accountant or attorney to structure the tax and ownership of your property is key.

 

Wealth tax

If your total net assets in France exceeds €1.3 million in value, your assets are subject to wealth tax. For non-resident property owners, this will be the market value of your property. If your property is valued at less than €1.3m no wealth tax reporting is required.

Two tax rates apply:  0.25% on net wealth valued up to €3.m, and 0.5% on net wealth of €3m and above.  So, for example, if your wealth is €1,300,100, the 0.25% rate is imposed on that full amount, which would be €3,250 euros a year.

You can avoid wealth tax by taking out a mortgage on your property, to keep under the €1.3 million and avoid wealth tax. Only mortgage debt may be taken into account.

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