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Money Matters and Legal / Your Money

Property taxes to increase in France: localized this year, more widespread in 2016

Increase Property Tax France Flickr : JWPhotography2012

Some decisions on local taxes taken at the municipal level this year in France will affect homeowners in 2015 and 2016. New increases in residential taxes (taxe d’habitation) and property tax (taxe foncière) as well as surtaxes on second homes and building lots are part of the program.

In light of upcoming departmental and regional elections, the majority of elected officials will be reticent to raise local taxes this year. Nonetheless, some major cities have already enacted notable increases. In Lyon, residential taxes will increase by 4% and property tax by a little over 6% this year. Similarly, Martine Aubry, Mayor of Lille, announced a revaluation of property tax by 10.5%.

Paris Property Group founder, Miranda Bothe says “Fortunately, France enjoys low property taxes relative to the US and many other countries, so these increases total a modest amount per household”.

Overall, local taxes will increase in Marseille and Tours by 4.9% and 4.2% respectively. Strasbourg inhabitants will see their taxes rise by 5%, after having enjoyed fiscal stability over the past ten years. This amounts to an average of 15 extra euros per household this year.

The most drastic increases affect homeowners in Toulouse, where property and residence taxes will rise by 15%. Toulouse’s mayor blames the previous Socialist mayor’s legacy for having to break his promise of fiscal stability.

Medium and small towns are not exempt, with almost all Ile-de-France municipalities affected.

This trend may become widespread in 2016. Olivier Régis, general delegate of the cities forum, predicts a possible increase in local taxes “of 5 to 10% on average for all municipalities”.

Reduction of state allocations and additional costs resulting from the implementation of the school reform — which shortens school days — are to blame, according to municipalities, as it now befalls them to fund part of the children’s extracurricular activities.

But the court of auditors sees matters differently: if town representatives receive less money, it is because they are expected to achieve major savings at the inter-municipal level: by sharing bin collection services for instance or simply through more conservative management of their annual budget.

In Bordeaux, where taxpayers will have to pay 5% more, the UMP mayor cites the decline in state allocations as a reason for the tax increase, while the opposition believes the fault lies with the many architectural projects undertaken recently.

Additionally, a law on the taxation of second homes was passed last November, increasing tax by 20%. The objective was to encourage owners to sell or rent their property and avoid them remaining empty for much of the year.

Now a few months later, the surtax has proved a useful method for cities to replenish their bank accounts. In Biarritz the surcharge has brought the council an extra one million euros. Other towns such as Nantes and Bayonne also apply the surtax.

This year the government also decided to increase property tax on building lots around large cities to encourage owners to either build on the land or sell it.

Currently this only applies to second homes and building lots in supposedly “tight” areas where property is lacking and susceptible to high prices, however the list of towns concerned by the surtax may get lengthier by next year.

 

Photo credit: Flickr / JWPhotography2012

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